Looking for advice on 2 commercial loans covering 25 rentals / 26 doors

Real Estate Deal Analysis & Advice
1wFollow

Looking for advice on 2 commercial loans covering 25 rentals / 26 doors

Jessy Hayes
Member since 2026 · 1 post · 2 votes

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.

2Reply
975 views

11 Replies

Jump to latestLatest
  • Nyisha Walton
    Lender · Houston, TX · Member since 2026 · 69 posts · 17 votes
    1w

    Hi Jessy, nice job putting this package together. I'd push for a set release price per house so you can sell one off without refinancing the whole thing, and get the balloon and cross-default terms in writing before you sign. If you want something to compare against the bank, we fund rental portfolios in 30+ states and could quote the 20-house package.

    0Reply
  • Nyisha Walton
    Lender · Houston, TX · Member since 2026 · 69 posts · 17 votes
    1w

    Hi Jessy, nice job putting this package together. I'd push for a set release price per house so you can sell one off without refinancing the whole thing, and get the balloon and cross-default terms in writing before you sign. If you want something to compare against the bank, we fund rental portfolios in 30+ states and could quote the 20-house package.

    0Reply
  • Marc Del Priore
    Lender · Philadelphia, PA · Member since 2024 · 17 posts · 4 votes
    1w

    Hi Jessy — on a package like that, the big structuring questions are blanket vs. separate notes, how the bank cross-collateralizes the doors, and whether each property still clears DSCR on its own once taxes and insurance are loaded in. At 8% on a 20-year am, small differences in LTV and reserves can swing monthly cash flow a lot across 26 doors, so it is worth comparing the blanket quote against a portfolio lender who will underwrite the rent roll as a whole. Your projected rent lift helps, but most lenders will size off in-place rents, not pro forma. I am Marc with Royal Partners — happy to sanity-check the two quotes if you want to DM me the terms you have so far.

    0Reply
  • Matthew MorrowBusiness Member
    Investor · PA - NY - NJ · Member since 2019 · 793 posts · 273 votes
    1w

    @Jessy Hayes The part I'd plan for is the jump itself. Going from 6 to 26 overnight means management, maintenance, and bookkeeping all need to be ready on day one, and you want a CPA and attorney looking at those loan docs. Size your reserves for 26 doors, not 6. Exciting move 🙌

    [email protected]484-791-6200
    CORE Team | Realty ONE Group Supreme548 Reviews
    WebsiteView Page
    0Reply
  • Adam Summerer
    Lender · Franklin, TN · Member since 2026 · 110 posts · 29 votes
    1w

    Before you sign, I'd get at least one portfolio DSCR quote to compare against the bank. There are blanket lenders that will put a package like this on one note around 75-80% LTV with a 30-year amortization, and on $18.5k of gross rent the gap between a 20 and 30-year am is real monthly cash flow while you're bringing rents up. The bank terms aren't bad, just ask when the rate resets or balloons and whether that 75% is per-house appraised value or the whole package, since bulk appraisals in small markets can come in light.

    0Reply
  • Amanda Taylor
    Investor · Member since 2025 · 9 posts · 1 vote
    6d

    Jessy, you've clearly done the homework, and the lenders here have covered the loan terms well. I'll add the bookkeeping side, since going from 6 to 26 doors is where it either holds together or turns into a mess. Before closing, decide how you'll see each house on its own. Tag every property separately (in Xero I use tracking categories; QuickBooks calls them classes) so you get a P&L per house, not just one LLC total. With release clauses on the table, you'll want per-property numbers when you decide which ones to sell. For the 20 houses staying with the current manager, ask for monthly owner statements broken out by property, plus the security deposit ledger and a rent roll at transfer. Book their statements in monthly, not at year end. Also check the loan docs for reporting requirements. Commercial banks often want annual financial statements, rent rolls, or a debt-service-coverage test each year. Easier to set that up now than rebuild it later.

    0Reply
  • Chris Straughn
    Member since 2026 · 6 posts · 1 vote
    6d

    Jessy, the line I'd pressure-test is "before unexpected repairs, vacancies, major capital expenses." On 26 older houses those aren't unexpected; they're the budget.

    Rough math from your own numbers: at the projected $24,150, a 10% vacancy allowance is about $2,415/mo, and $150/door/mo for repairs and capex is $3,900. That takes $6,794 down to roughly $480. Lenders and appraisers will also look at in-place rent. At $18,540, after debt, taxes, insurance and 7% management, you're near $1,200/mo before any vacancy or repairs. Your assumptions may be better than mine, but run that version before you sign.

    On your list:

    • Truck: I'd keep it out. A depreciating asset adds little and complicates a default.

    • Get a fixed release price per house in writing, plus the balloon or rate-reset date, the prepayment terms, and whether loan 1 and loan 2 cross-default.

    • $60k is about $2,300 per door. I'd want more until the rents are actually raised.

    • Keep the current manager through year one. Take houses back once you have a trailing 12 months on each.

    Have your attorney read the loan docs.

    Disclosure: I build Doorcount, a deal-underwriting tool. Drafted with AI help.

    0Reply
  • Justine Sanchez
    Member since 2020 · 8 posts · 0 votes
    4d

    Hi Jessy, congrats on pulling a 26-door package together. Before signing, I'd pin down four things in the loan docs. First, the prepayment schedule and whether it steps down, so selling or refinancing a few houses later doesn't get expensive. Second, whether there's a balloon or rate reset before the 20-year amortization ends, and what the reset is tied to. Third, the cross-default and cross-collateral language: with 20 houses on one note, ask for partial releases so you can sell or refi individual houses without paying off the whole loan. Fourth, any DSCR or debt-service covenant the bank tests each year, and what happens if you miss it while you're still raising rents toward the projection. I'd also size reserves and underwrite on today's $18,540 in rent, not the $24,150 target, until those increases are actually in place, and have a real estate attorney read the note and mortgage on a deal this size.

    0Reply
  • Noah WrightBusiness Member
    USA, Nationwide · Member since 2024 · 280 posts · 112 votes
    3d

    You're asking this before the doors close, which is the cheapest time to answer it. If the payment still works on the bigger number, I'd usually lean toward taking the full 75 percent on the first loan and holding the extra as cash. Equity sitting in five houses isn't really a reserve. Getting it out later means a new appraisal, a new application and the bank saying yes, maybe right when you need it fast. Cash in the LLC account is there the week a roof goes. The cost is the 8% you pay on money that might just sit, so the real decision is whether that interest is cheaper than being short on cash once you're running 26 doors. What do you expect the five to appraise at, since that decides how much extra the 75 percent actually frees up?

    [email protected]737-773-3717
    0Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 673 votes
    2d

    Jessy, a few things from the lending side on bank portfolio loans like these:

    Release prices: get a set release price for each house written into the note, often 110 to 125 percent of the loan amount allocated to that house, with the allocations listed by address. That lets you sell or refinance one property without the bank re-underwriting the whole package.

    Cross-collateralization and cross-default: if both loans are with the same bank, ask whether they are cross-collateralized or cross-defaulted with each other and with any other debt you have there. Cross-default means a problem on one note can put the other in default. Try to limit each loan to its own collateral.

    Rate reset and balloon: community bank loans on a 20-year amortization are often fixed for 3, 5 or 7 years, then either reset or balloon. Get the reset index, margin and any rate floor in writing, and find out whether a balloon means a full re-underwrite. Ask for the longest fixed period they will offer.

    Prepayment: bank terms range from no penalty to a step-down schedule. Since your plan is to send extra cash to principal, confirm in writing that partial prepayments are allowed without penalty and whether a release triggers a fee.

    Covenants: look for a DSCR covenant (commonly 1.20x to 1.25x, tested annually), required deposit accounts, annual financial statement and tax return reporting, and any minimum liquidity requirement. Missing a reporting covenant can be a technical default even if every payment is on time.

    Borrowing the full 75 percent: the extra cash adds cushion but you pay 8 percent on it. Ask whether the bank would do a smaller loan plus a line of credit, or allow a future re-advance, so you only pay interest on what you use.

    The truck: I would keep it out. Personal assets as extra collateral rarely improve the terms and they complicate releases and payoff.

    Reserves: 60k on 26 doors is roughly 2,300 per door, which can get thin with older houses if a couple of roofs or HVAC systems go in the same year. Run the numbers with vacancy, repairs and capex together at something like 15 to 20 percent of gross rent and see what is left of the 6,794.

    For comparison, it is also worth pricing a portfolio DSCR loan. Those typically run on a 30-year amortization, which lowers the payment, and qualify on the rents, but usually carry a prepayment penalty, so weigh that against your plan to pay down principal.

    [email protected]860-538-3672
    ProAlpha Capital56 Reviews
    WebsiteView Page
    0Reply
  • James Loffredo
    Lender · Dallas, TX · Member since 2024 · 15 posts · 5 votes
    5h

    Jessy, 8% is high, and the 20-year amortization is what's really squeezing your cash flow. A 30-year fixed DSCR loan spreads the payments out, so the monthly payment drops and it cash flows better. Most people refinance DSCR loans within three to six years anyway.

    One catch on the 20-house package. At about $50K a house, you're under the minimums on the DSCR programs I work with. They start at a $55K loan and usually want $75K or more in value per house. For those I'd push the bank hard for a 25 or 30-year amortization. For the other five, if they're worth $75K or more each, DSCR is worth pricing out.

    I run a lender, so weigh that.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free