Disclosure up front: I run CR Equity AI, a lender (NMLS 2797309). Details are anonymized. This is for education, not a sales pitch.

We recently worked on a DSCR portfolio loan for roughly 175 rental units spread across about 150 properties. Most are in one West Texas metro, with a handful in smaller towns nearby. Portfolio loans come up a lot on this forum, so here's how they're structured, what worried the borrower and seller going in, and what we'd tell anyone attempting one.

What the portfolio looked like

• About 150 addresses and 175 doors: mostly 2–3 bedroom single-family homes, plus about 60 accessory and garage apartments sharing a lot with a main house

• Units from about 300 to 3,000 sq ft, averaging roughly $1,150/month in market rent

• Older housing stock, held across several LLCs, with some existing seller financing

• A mix of conditions: many units stabilized, some vacant, some needing rehab (roofs, HVAC), a few month-to-month leases, and some Section 8 tenants

• In-place rents below market on part of the portfolio

How a DSCR portfolio loan is structured

1. Blanket or individual loans. One loan secured by many properties (cross-collateralized), or a set of individual DSCR loans closed together. A blanket loan means one closing and one payment. Individual loans make each property easier to sell or refinance on its own later.

2. Coverage is tested at the portfolio level, usually. Total rent against total payment (principal, interest, taxes, insurance and HOA). Strong properties can carry weaker ones, within limits.

3. Release provisions. Selling one property out of a blanket loan typically means paying down more than that property’s share of the loan, often 110–125%. Negotiate this up front if you plan to sell any.

4. Eligibility tests per property. Minimum value, minimum square footage, and legal unit count still apply property by property. This is where small portfolios lose doors.

5. Leverage. On portfolio purchases we typically see 70–75% loan-to-value (LTV), and lower for cash-out or where condition is weak. On this deal: [final LTV / loan-to-cost].

What worried the borrower and seller going in

• Underwriting load. 150 addresses means 150 titles, insurance policies, rent rolls and leases. Multiple LLCs and the existing seller financing had to be cleaned up into a single borrowing entity.

• Appraisals. Ordering about 150 full appraisals before you know whether the deal works is real money. At typical fees that’s tens of thousands of dollars in upfront soft costs, plus weeks of waiting.

• Rent used for qualifying. A few units were leased well below market. On a refinance, many lenders count the lower of the lease rent or the appraiser’s market rent (the Form 1007 rent schedule). How the loan is sized changes a lot depending on which number counts.

• Vacant and rehab units. Vacant units don’t show up in a lease-based coverage calculation, and properties with deferred maintenance can get “subject-to” appraisal conditions or be excluded from the loan entirely.

• The small units. Studios around 300 sq ft and garage apartments can fail minimum square footage or minimum value tests. A second unit on one lot that isn’t permitted generally can’t be counted as income.

How we approached it

• Value and rent before spending on appraisals. We ran the full property list through AIVAA, our AI valuation agent, to estimate values and 1007-style market rents for every unit. That told everyone early which properties sized well, which were marginal, and which to carve out. Formal valuations were then ordered only where the deal penciled, which cut soft costs and time. AIVAA doesn’t replace an appraisal: final sizing still follows the valuation the loan investor requires.

• Split the portfolio into groups. Stabilized units went into the main loan. Vacant and rehab units were handled separately (a bridge loan now, then a DSCR refinance once leased) rather than dragging down the blended coverage.

• Clean up entities and existing liens early. Payoffs, seller-finance releases and vesting were sorted out before appraisals, not after.

• Result: [days to close / number of properties included / coverage ratio achieved].

Advice if you’re putting together a portfolio loan

• Send the lender a clean property list first: address, beds/baths, square feet, current and market rent, occupancy, lease end date, year built, condition. You’ll get a real answer much faster.

• Ask about minimum value, minimum square footage and treatment of second units on day one. These knock out more doors than credit does.

• Know whether your coverage is calculated on lease rent or market rent, and get it in writing.

• Pull vacant and rehab properties out of the main loan rather than letting them reduce leverage on everything else.

• Negotiate release prices and the prepayment penalty before you lock, not when you go to sell.

• Budget for soft costs (appraisals, title, legal, insurance), and ask whether the lender can size the deal before you pay for 150 appraisals.

Happy to answer questions on structure in the comments.

Disclaimer: CR Equity AI (NMLS 2797309) is a lender. This post is for educational purposes only and is not a commitment to lend or an offer of credit. Terms, leverage and timelines vary with the property, borrower, valuation and investor guidelines; results may vary based on the information in each deal.