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Updated about 6 years ago on . Most recent reply

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Brad Swearingen
  • Wholesaler
  • Wake Forest, NC
9
Votes |
30
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How to do a portfolio loan for multiple less expensive properties

Brad Swearingen
  • Wholesaler
  • Wake Forest, NC
Posted

I found a seller in a small town who owns 9 rental houses (11 units total since 2 are duplexes).  The houses average around $33,000 per property so let's say I could purchase the whole bundle for $300,000. Is it possible to get a portfolio loan to purchase all 9 properties?  Has anyone done this?  Is this is a good idea to do this?  What do I not know to know if this is worth pursuing?

The pros I see:  at $500 average rent per unit x 11 = $5500 per month.   Purchase price of $300k. Down payment of 25% over 30 years at 5% = Mortgage = $1562.  So 5500-1562 = $3938 net profit per month.  Rents can be increased due to below market rents. Half the houses have updates.  The rental market is strong in this area.

The cons: multiple capital expenses, multiple people to deal with, difficult to get a loan, half the houses need updates, once rents are increased can cause vacancies.

Brad

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Chris Martin
  • Investor
  • Willow Spring, NC
3,441
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Chris Martin
  • Investor
  • Willow Spring, NC
Replied

Funny math you have.I would get some real numbers first.

Are the properties owned free and clear or encumbered? I would talk to the seller and ask a few questions. Does he want to sell all at once to one buyer? Does he need all the cash now? Can he manage with $50K cash (or $10K? or $30K?), today, and the rest paid over time? If he's flexible, I would put an offer with the seller financing. Bank Financing, while a possibility, can be a PITA for many people. Have him carry back financing if possible. 

If you have a working relationship with a commercial bank, then financing multiple properties is definitely possible and people (including myself) in NC have done this with multiple differrent local/regional banks. It's much, much easier if you have working history with a bank. Walking in on a "cold call" with this kind of scenario? You'll need to add concessions (extra collateral) if you can even get traction. And expect rejections from many banks. Also expect this may take time as in many weeks regardless of your PFS numbers and liquidity. 

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