Buying 15 rental properties???

15 Replies

Ok so I'm just getting my feet wet in investing... I just bought my first flip house and now looking to get into rentals...  my agent put me in contact with someone moving out of town to retire and they are selling 15 rental houses all in the same area.... some are duplexes and triplexes...  so it comes out to 19 doors total....  all of them rent for 400-500 each and they are all currently rented... he will sell them all to me for 220k... some are in rough neighborhoods and need TLC...  so don't think im getting this great deal, however, on a loan of 220k... I'm still set to make a good bit per month... 

My question is, does anyone know a better way of financing something like this?  Rather than appraising every single location and getting a loan on each location individually... is it possible to get a lump sum and use it all as collateral?? 

Any info is appreciated.... 

My advice would be to run away from this deal as fast as possible. At those low rents you’re going to have a very difficult tenant base

Rent here for a decent 3 bedroom house is around 700...  so for smaller 2 bedroom houses and dupleses.... iit doesn't seem that off base... 

Where is Lisboa? Portugal?

No I have no idea where that came from... I've changed it twice.... it keeps going back.... I'm from South Louisiana....

lol... oh it's not that bad here!!! I couldn't live anywhere else!!!

@Grant Ancelet to abswer your question about financing the deal, start talking with smaller local banks. it sounds like a portfolio loan where the collateral would be all of the properties would work for you. I suggested smaller banks because they would have to keep the loan in house and that isn't typically how larger banks operate. They will still need to appraise the properties and they may have a shorter term and/or slighter higher interest rate but that is typical for a commercial loan.

Thanks Brenton...  I will look into that

Also look into getting a clause on the portfolio loan to make sure you can sell each one if you want to and not have to sell all 15 at once because they are on one loan.

If I read your post correctly, using $425/month x 19 that's $8075/month in income for $220k. Anytime you have numbers like that it is definitely worth taking a closer look. 

Can you get the address of all 15? Drive the neighborhoods and see if you feel comfortable there? What kind of tenants will you have and do you have the skill set to manage them?

You don't have to buy all of them, you can certainly cherry pick only the ones you want and if he insists on all or nothing maybe you take them and fire sale the ones in rougher condition/areas? 

Make sure you check comps to ensure you are not overpaying for any of them. I don't know your area but those numbers are killer and may be the norm for you guys (you'd be working extra hard to get a 1% deal in my neck of the woods).

Can you get an experienced partner to do this deal with? I would consider giving up part of the deal if it gives you a better chance of success. 

Best of luck and keep us posted....

thanks!! Good info!!

Yes I can pick and choose which to buy... i habe the addresses and all info...... however... it's a pretty good discount for someone to come in and buy them all.... that way he can be done and not have to sell individually.... 

@Grant Ancelet Grant. I would buy the whole lot and pick the rougher ones for the financing. Then I would sell off the bad ones right away and use that money to pay the note(s) down. What was left I would own free and clear and they would be the more desirable rentals. This would work assuming the houses appraised for more than the $220 purchase price. Even if you only ended up with a couple free an clear "good" properties and a couple "good" ones with a smaller amount of leverage. RR

You can do a blanket commercial loan for all of the properties under one loan and one LLC. But with low rents and so many properties when this will be your first purchase. Learn to walk before you run!

Thanks everyone..... I will go talk to some smaller banks today and see what I can find out...

@Grant Ancelet - if you are planning to use a property management company for any or all of the properties, have the property management company take a look at the properties with you to see if they would be willing to manage them. If there are any properties that they wouldn't manage, ask them why.

Also, check to see that the current tenants have leases in place and find out how long they have been in the units. Beware of the seller throwing a bunch of friends and family tenants who don't plan to stay or pay under the new ownership in there over the past few months to make the properties look good so that they sell quickly.

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