I’m looking for some advice from people who have structured larger portfolio loans before. This is my first time doing anything this big, so I’m trying to make sure I understand the risks and don’t overlook something important.

I currently own or have under contract five properties totaling six rental units. I’m also working on buying a package of 20 additional single-family rentals from one seller in a small Indiana market.

After everything closes, I would have:

• 25 properties

• 26 rental units

• Total purchase basis of approximately $1.385 million

• Current combined gross rent of about $18,540 per month

• Projected gross rent of about $24,150 per month after rents are gradually brought closer to market during the first year

The financing is being divided into two commercial loans.

Commercial loan 1

This loan will include my first five properties..

Current application amount is approximately $315,000, but the bank says it may lend up to 75% of the appraised value of the collateral.

Expected terms:

• 8% interest

• 20-year amortization

• Taxes and insurance paid separately

• Loan in my LLC's name, with my wife and me also responsible for the loan

Commercial loan 2

This would cover the package of 20 rentals.

• Purchase price: $1,000,000

• Approximately $50,000 per property

• 8% interest

• 20-year amortization

• Taxes and insurance paid separately

The payment on the first $315,000 loan should be approximately $2,635 per month. The payment on the $1 million portfolio loan should be approximately $8,364 per month.

I have entered the known property taxes, landlord insurance and projected flood insurance into a spreadsheet. I am also budgeting for an outside property manager on the 20-house package during the first year.

Using a 7% management estimate, the projected numbers once the rents are fully increased look roughly like this:

• Gross rent: $24,150 per month

• Commercial loan payments: approximately $10,999 per month

• Property taxes, landlord insurance and flood insurance: approximately $5,045 per month

• Property management: approximately $1,313 per month

• Estimated cash remaining: approximately $6,794 per month

That number is before unexpected repairs, vacancies, major capital expenses and income taxes.

My plan is to leave all of the rental income in the LLC account at first. I am considering a $60,000 hard floor in the checking account, building the account toward $100,000, and then using money over $100,000 to make additional principal payments.

The current manager already handles most of the 20-house package. I am considering leaving the properties with them through the transition and then slowly taking management back one house at a time as I become comfortable handling the larger portfolio.

Here are the main questions I have:

1. Would you borrow the full 75% available on the first commercial loan if the appraisals support it, or borrow only what is needed to complete the purchase?

2. What release language should I negotiate so I can remove and sell individual properties from the loans later?

3. Is it a bad idea to include my truck as additional collateral?

4. What prepayment penalties, balloons, rate resets or cross-default provisions should I be watching for?

5. Is a $60,000 reserve floor enough for 26 rental units, or would you hold more?

6. Would you keep the existing property-management company for the first year?

7. Does the projected cash flow justify the amount of leverage, or am I missing a major expense?

8. Is there anything else you would require in the loan documents before closing?

I know this is an aggressive expansion. I am not trying to pretend I have experience operating 26 units. I’m looking for honest feedback from people who have used blanket loans, portfolio loans or multiple commercial loans to grow a rental business.