Wholesaler · Pensacola, FL · Member since 2017 · 20 posts · 7 votes
A friend of mine has a landlord that is wanting to retire and move away from the area. He owns 10 different rental properties and wants to sell them eventually. I haven't talked to the man or even looked at the properties yet but it's in the works. My question(s) are;
How would I go about financing 10 properties at once? Obviously a normal mortgage for all 10 won't work.
Is my best option to find a bank that does portfolio lending? How likely are they going to loan to someone without other investments or collateral. I don't have any other properties yet, just my personal home. I have a good paying job, a good credit score, and a modest bit of savings.
Is there a creative way to come up with the down payment(s) or a way to purchase without down payments?
You'll need some serious experience operating the type of asset you're buying before a bank or most commercial lenders will lend you money for the purchase (i.e. before seeing how you perform on the asset first aka "seasoning").
In other words, you'll need to get them through seller financing or just buy as many as your existing income can support.
You'll need some serious experience operating the type of asset you're buying before a bank or most commercial lenders will lend you money for the purchase (i.e. before seeing how you perform on the asset first aka "seasoning").
In other words, you'll need to get them through seller financing or just buy as many as your existing income can support.
Find a local bank and talk to their commercial devision, talk numbers. Their loan officer should be able to help you. The appraisal will be everything, your going to get a NOI appraisal if they are sold to you on one contract with one loan for all properties, likely based on a 8% cap.. If you can get 2 or less properties per contract, they will end up as a residential appraisal, and you will have matching loans per contract. Hoping your buying these for 60c on the dollar, because that's likely what they are worth and what you will need to make it work, plus rehab cost as units turnover. This will break you or make you!
@Anne Laurenzi This should be the perfect owner finance situation. Have your accountant explain to you the benefits so you can convince the seller that a cash sale isn't the best solution.
@Anne Laurenzi Assuming a conventional lender can't assist. You could use Vincent's suggestion. I've worked with many investors who want to acquire properties quickly but they are vacant (not cash flowing), need rehab, the investor needs to file their taxes before qualifying for conventional, and/or needs to season the property before getting conventional financing. You can use a bridge lender to get into the properties and then refinance into permanent financing.
If you do decide to go this route and blanket all ten properties make sure to ask about partial releases in the event you want to sell one property or refinance one at a time.