Looking for financing options for buying rental portfolio

[Srividya R.]

Hi

I have been a landlord for about 7 years with 5 properties procured slowly over the same time.

I now have an opportunity to buy a portfolio of 10 properties (about 2.5m) which I am evaluating.
My first concern is with financing this - since I cannot go conventional like the previous ones.

Have you worked with any lenders that service such portfolio loans?
What do’s and don’t’s would you give? What should I be prepared for?

properties are in Tampa FL

Thanks!

[Alex Bekeza]

@Srividya R.

In recent months, I've watched the incentives for blanket loans dwindle.  As far as the non conventional options I see right now it seems advantageous to the borrower to just financing all 10 1 x 1 simultaneously even if under one purchase contract. 

A few reason why I'd prefer 1 x 1 over a blanket:

Rates/Terms/Fees - With only 10 properties any fee savings would be minimal and offset by the fact you could get better rates, fixed for longer periods, with individual loans in MOST cases (there's always exceptions in this world). 

Partial Payoffs - Most lenders doing blankets right now either don't allow partial payoffs or require you to pay an additional 10-20% of principle down when you do. I don't see any reason to tie yourself up like this since nobody can predict the future and you'll want the full flexibility to sell off any individual property at any time you see fit without so much restraint and or cost. 

Prepayment Penalties - I'm seeing most blankets come with yield maintenance or aggressively long prepays. With such high anticipation of lower rates coming in the next few years (compared to today) you won't want to get stuck in too aggressive of a prepay penalty. Most individual DSCR loans will have less daunting prepay options.

These are just my 2 cents.  I hope you find it useful.  I originated several dozen blanket loans in 2021 and 2022 but more recently I've found more success going 1 x 1 unless we're talking about a huge portfolio.  Happy to chat more about your scenario off line as well.