Have: $600k equity; Want: 9 duplexes. Financing options??

[Justin Dominguez]

Hello!

DFW investor here with an off-market opportunity to purchase a portfolio of 9 duplexes from the estate of an investor who passed away. They are all in good condition and are in a well-established neighborhood with a good school district close to the metroplex. All on the same street. All less than 20 years old. All currently 100% rented. Mix of 2 and 3 bedroom units - all with 2 bath, most with 2 car garage.

They are trying to sell each each building individually off-market, but are willing to accept offers for the whole group. Buying all at asking price is around $1.6MM, they would likely accept less if purchasing all but I don’t know how much. Market value on all is a little over $2 million.

NOI using the current rental income is $7,870. Rents are below market, so increasing them over the next couple of years would increase the NOI to $9,800. (This is using last year‘s insurance premiums, last year‘s property taxes + 10%, 10% property management fee, 6% vacancy and collection loss, and 7% repairs and maintenance cost.)

I have three rental properties. Combined, their tax value is $617,000. Market is more but I don't have comps so that's my base. There is approximately $50,000 worth of loans against them - so I have quite a bit of equity. Two of them are single family homes in one LLC, the other is a commercial building that is in its own LLC.

I have around $20,000 in cash (I would have more but I just used $28,000 to purchase a 4th sfh rental).

Local bank was willing to explore using existing rentals as collateral with no down payment- but all properties would be tied up into a single loan and the debt service (20 years, 6.25%, $1.5MM) would be way too high (despite a LTV of 55% when including my existing rentals in the group).

Any advice on how to move forward?