Analyze my deal: 5 SFH portfolio closed on today.

[Nathan Hall]

We closed on the purchase of five single family homes, mixture of 2-3 bedroom, 1.5-2 bathroom homes today with a commercial/portfolio loan. At the time of contract, all were occupied. Before closing, one tenant left. When fully tenanted, rents are $3750 a month and low in our estimation. Looking to bump them by $50 a month in the next couple of months. Here are the details:

Asking price: 315,000 as a lot; 360,000 as individual sales

Settled price: 300,000

Down payment: 20%

Fully inspected the vacant unit after walkthroughs of the other four, found that the refrigerator wasn't, a handrail on the stairs was loose, needed new carpets, no legal egress window on second floor... Sale was as-is but went back to seller with these issues, extrapolated like issues across 5 properties, asked for 15,000 off. Settled at 7500 since it was an as-is portfolio sale.

Amount due at closing: 53,134

Private funding loan for down payment at 3%: 60,000 (projected repayment over 10 years; after year one the percentage goes to prime minus 6%)

Commercial loan (20 years, 5.25%/5 year treasury index+3%)

I think this was a good deal but I'm always a second-guesser, especially of myself. For me, if I'm 100% honest, it was an opportunity to lock up properties that wouldn't have stuck around on the market as a portfolio, at this price, for very long. My area is already drying up, and there seemed to be enough there to make the play. I was comfortable doing the deal at 12% on the private loan just to get it done and paying out of pocket if needed, but the lending party wanted to be a part of what we're doing and refused. I'm one of those people that will ALWAYS pay their bills no matter what it costs me personally, because I try very hard to be honest with everyone. We're hoping to have all the units renting around $800 each by the new year. All the tenants that stuck around said that they were happy and wanted to stay, and one confessed that she was worried she'd need to find a new place. She was so happy when we explained we weren't flippers, and wanted her to stick around but that rents would go up gradually.

These are C+/D properties, I think, for context. I'm still not sure on how that works.