Lending options for purchasing a portfolio of 5 residential homes

[Leif Oldert]

Opportunity to purchase a portfolio of 5 neighboring residential properties. Is it possible to bundle them into a commercial loan? Or does each property require a unique mortgage? Seeking advice on options, both conventional and creative.

[Leif Oldert]

@Leif Oldert

@Andrew West

[Account Closed]

It can be done with one commercial loan. 80% LTV, 30-year fixed rate starting from low 4s depending on your credit scores and the cash flow of the properties.

[Timothy Hero]

Private/non-qm/commercial lenders can do one loan if it's the same seller. 

[Brenna Carles]

There are lenders that can do a commercial bundle but you want to check out the interest rates, and down payment for them in total. If you do conventional or DSCR, you can talk with the title company about giving you a discount to do all five properties with them so your out of pocket costs are less. Hope this helps!

[Leif Oldert]

Thanks @Account Closed! 

[Sean Thompson]

Yes definitely doable with a commercial / DSCR loan. I would put together a nice spreadsheet with all the property characteristics (rents, purchase price, taxes, insurance) and present that to a few different lenders to see if that can do it, and what they would require. Good luck!

[Jayson Cain]

@Leif Oldert You can definitely do this. I've done this with my properties in Indianapolis and also help other investors with a purchase of a whole portfolio, or cash-out refinance. 

[Sean Sloop]

Hey Leif, I did a 3 Single Family portfolio earlier this year with a commercial bank. It was pretty nice to get them all bundled into a single loan like that. I think I got 75% loan to value. 

The downside is you will probably have a less favorable loan term, shorter fixed rate period, and higher interest rate. 

[Leif Oldert]

Thanks @Sean Thompson @Jayson Cain and @Sean Sloop!

Unfortunately it looks like this deal is going to a family member instead of us, which is a shame. Five adjacent AirBnB’s that net $240k/yr would’ve been nice. We were partnering on it with a friend, but 50% of something is better than 100% of nothing. 

Back to the drawing board.

[Harvey Levin]

One caution about portfolio loans is if yiu want to sell one of the properties it can be very costly. Dont be fooled by no prepayment penalties as that usually applies to entire loan not selling off the collateral.  I know of several investors who got stuck.