How to finance a mutli-parcel deal?

Question

I am a Realtor and I am always trying to build my knowledge. I am looking for seasoned investor or loan provider insight. Other than cash, how can a multi-parcel deal be purchased? I have attached the listing below for an example.

714 N Monroe 19 Others, Bay City

$2,950,000 | 16 bds • 16 ba

https://apps.realtor.com/mUAZ/73e1d2a4

​714 N Monroe 19 Others, Bay City

$2,950,000 | 16 bds • 16 ba

https://apps.realtor.com/mUAZ/73e1d2a4

Alex Roter · Answer

@Brittani Purman If you can, ask about the lender's "Partial Release" clause (in case they do have one), you may be unable to refinance or sell off one of the properties in the blanket loan until the entire loan is satisfied. Some lenders have this, while others do not.

Andrew Postell · Answer

@Brittani Purman residential lending ends at 4 units.  When we talk about "residential" lending that means Fannie Mae/Freddie Mac/FHA/VA/USDA....only 2 of those loan types would allow to purchase investment properties and they won't lend on anything over 4 units and they have strict rules about the lots being next to each other, underwriting, etc.  If the word "commercial" scares your clients then use "portfolio". These loans as loans that come from the bank's own "portfolio" of money.  Sometimes referred to as "commercial" loans. Sometimes called "bank statement" loans.  Sometimes called "DSCR" loans.  Whatever they want to call them it's money that comes from their own portfolio of funds.  These loans are a lot more flexible than "conventional" loans.  Bank's money = Bank's rules.

Andrew Postell · Answer

@Brittani Purman you could use a standard "Blanket" loan to do this.  Blanket loans cover multiple properties with one loan.  Pretty standard stuff in the commercial/portfolio lending world.

Brittani Purman · Answer

@Alex Roter thank you for the tip. How hard is it to release a property from a portfolio loan if a partial release clause is included?

Brittani Purman · Answer

@Andrew Postell thank you so much for your insight. It is definitely true that government backed loans have their limitations.

Dashawn Francis · Answer

Hi @Brittani Purman a deal like this would definitely need an alternative source of financing such as a private mortgage known as commercial funding. Lenders usually fund up to 75% LTV. Please, let me know if you have some time to connect this week. I can definitely give you a break down.

Best,

Dashawn F

Brittani Purman · Answer

@Andrew Postell I have a smaller scenario. Adjacent parcels where the smaller parcel uses the driveway of the larger parcel. There is no formal agreement. They are listed and being sold together for $144,900. Is there a residential product that will finance this? I am getting conflicting answers from lenders regarding whether or not there is a non-commercial option for a standard residential buyer. I am finding that there are some "standard" homebuyers interested in this property and the word commercial scares them.

How to finance a mutli-parcel deal?

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