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Updated over 3 years ago, 04/12/2021

User Stats

9
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8
Votes
Dan Aharon
8
Votes |
9
Posts

Looking for a lender for a 25-unit portfolio in Detroit, MI

Dan Aharon
Posted

I'm considering buying a 25-unit portfolio in Detroit, MI of houses - with value per unit starting at $30k and going up to $150k.

Has anyone had good experiences with a lender that can take a portfolio approach and offer a competitive rate?

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2,879
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3,369
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Mary M.
  • Rental Property Investor
  • Portland OR
3,369
Votes |
2,879
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Mary M.
  • Rental Property Investor
  • Portland OR
Replied

for a property that large you need a commercial loan you can do a google search for "commercial Mortgage Brokers" in your area and I am sure plenty will pop up. That will be your best bet. 

You will need excellent cash reserves (6-18 months of PI and maybe PITA) and around 25% down.....   good luck! 

ETA I didnt see the "houses": in my first read....  I would still contact a commercial mortgage broker as that will probably be your best bet...

User Stats

9
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8
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Dan Aharon
8
Votes |
9
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Dan Aharon
Replied

Thanks, Mary! Have the cash reserves and yes this is for SFRs.

Will do some Googling.

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8,283
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4,889
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Drew Sygit
Property Manager
Agent
#1 Legal & Legislation Contributor
  • Property Manager
  • Royal Oak, MI
4,889
Votes |
8,283
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Drew Sygit
Property Manager
Agent
#1 Legal & Legislation Contributor
  • Property Manager
  • Royal Oak, MI
Replied

There are some lenders here on BP, you can look up.

I'd be cautious about a $30k Detroit house. High probablitity of being in a Class D neighborhood. 

Make sure you have your own inspections done and find a good PMC to give you their opinion BEFORE you buy.

You might want to read our series about “How to Screen a PMC Better than a Tenant”, since selecting the wrong PMC is usually more harmful than selecting a bad tenant:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

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Logical Property Management.
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User Stats

24
Posts
44
Votes
Lamar Lee
  • Developer
  • Detroit, MI
44
Votes |
24
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Lamar Lee
  • Developer
  • Detroit, MI
Replied

If you can figure out the financing and have the right boots on the ground, this deal can be very profitable. There are lenders who will do the deal but they will prob only lend 60% LTV and the rate will be 9-10%. The hardest part will be, you'll have to do an appraisal and clear title on each property and that can be costly and very time consuming. The good thing is, if this deal is what you think it is, it will cash flow enough to pay that rate, and still yield you substantial cash flow! I've found it to be easier finding 30 good deals and doing them individually.

Account Closed
  • Lender
  • Charlotte, NC
117
Votes |
218
Posts
Account Closed
  • Lender
  • Charlotte, NC
Replied

Are the properties in livable condition and ready to rent out? Do you have the rent/tax/insurance/HOA of the properties? As @Mary M. mentioned, commercial loan would be your ideal choice to purchase this in a package. I have had some experience with such financing solution, called portfolio loan or blanket loan. The rates are 4.5-5.5% with 1-3 points, LTV can go up to 80% for purchase.

User Stats

24
Posts
44
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Lamar Lee
  • Developer
  • Detroit, MI
44
Votes |
24
Posts
Lamar Lee
  • Developer
  • Detroit, MI
Replied

@Wenda Wang

Is there a minimum value per property?

Account Closed
  • Lender
  • Charlotte, NC
117
Votes |
218
Posts
Account Closed
  • Lender
  • Charlotte, NC
Replied

@Lamar Lee Yes, it is $75k.