How big is to big? Buying a portfolio.

[Andrew Tegeler]

I am looking at scaleing up from I currently have 2 single families and a duplex. I am not sure what direction to go though, I am look at a 23 scattered property portfolio with a 12.39% cap. This would be a big deal for me, and it's way more money than I thought I would ever spend. Or should I purchase properties at the court house one at a time. I guess I am just looking for advice on portfolios, if they are worth it or not. And any advice on who and how I would get financing for them with very little down payment. 

I was planning on using a line of credit for half the down payment and raise the rest somehow.

[Levi T.]

Mmmm, my bread and butter. In my niche, I buy them up all day long, HOWEVER, as mentioned above, your going commercial lending, and you better be ready for a hard punch to the gut, because it's coming. Landlords who have those numbers are in one position and one position only.. They have been slumming, they are hitting rock bottom financially and repairs are reaching the point of being a real liability, or the reaper is calling and they need to exit asap in their old age.. normally all the above!

I picked up about 20 units the other winter back, and burned through $200,000 in repairs quicker than you could write a check, and I have my own rehab crews that work full-time at this game. You better be ready for non-pays up to 100% of the portfolio, evictions for months on end, all units being stripped clean and made new, and as always getting them rented. If your numbers are awesome, and your good at turning portfolios around, the end game is big money, but if your not ready for it, you will end yourself. If you can withstand 20k into each unit, and 100% vacancy over 12 months roll up, knock yourself out, otherwise I'd tread carefully. Good luck!