I have a seller w/ 24 one to four unit residential properties he is liquidating as part of a deferred 1031 exchange. I have walked through all 24 properties w/ my property manager and am trying to work out a deal on all 24 properties. I can not get 24 indiviual conventional residential mortgages on these, so I am looking at purchasing them through one blanket loan. I have never done this before (or gotten any commercial loan for that matter). The properties would produce excellent cash flow at my offer price. The total offer as I have it right now would net the seller 1,014,000.00. I would like to have the seller pay my down payment and closing costs so I could use my personal funds for fix-up costs. If absolutely necessary, I could come up w/ 70-80K of currently available funds, or maybe 120-130 if I pull some additional equity lines. I also have the option of borrowing money from friends and family who have offered to partner on any deal I make, but I would prefer not to do this.
My questions are these:
is it possible to purchase these 24 properties from one seller but on different parcels under one loan?
if so, what kind of interest rate would I be looking at?
what kind of down payment would be required?
what kind of closing costs would be involved?
is it possible to add these costs to the purchase price and have the seller pay closing and DP?
I know that on a commercial loan my personal credit does not matter, but just for the record my credit is in the 750’s, I have a 90K income, and currently own 6 profitable properties.
Any knowledgable advice would be greatly appreciated.
You actually could do 24 individual loans, but it would obviously be easier to do a blanket loan. Also, credit definately matters on a commercial loan. Maybe you were thinking of hard money? Hard money and ocmmercial are 2 different stories. As for the blanket loan, I will have to look into that. Have you tried a small local bank? BTW - are you in Ohio?
thanks for the reply. I’m not in Ohio but all our properties are. I say I can’t do 24 individual loans only b/c the closing costs and lender fees would be prohibitive. My realtor put me in contact w/ a few lenders who do blanket loans and it’s looking promising, but if you find anything we’d always be interested in comparison shopping. My wife and I have spoken to you before (it’s been a while). We’ve never done a loan through you, but you’ve always been very helpful and have offered good advice quite a few times.
By blanket line of credit are you refering to buying the properties on land contract and then doing an imediate refi or LOC to pay off the land contract? If so, that is my #2 option of how to deal with this, if not, then you’re a step ahead of me and I don’t understand exactly what you mean.
ok, ill try to explain. feel free to let me know if i forget something or you need more info. im assuming that you already own a house or two. by blanket line of credit, i mean a line of credit secured by two or more properties. its very similar to a home equity line of credit, in that it is interest only and revolving. the available credit is based on the value of the properties in the blanket, and will be 80% ltv. what is nice about it, besides being interest only and revolving, is that when you want to purchase one or more properties, you withdraw the cash from the line for the purchase, and pay no closing costs. the new property is collateralized into the blanket line. the bank will do an appraisal, but its free. so as long as you dont pay more than 80% ltv for a property, you can buy as many as you want. i think a bank would allow you to refinance any properties you own now, and place them into a blanket line. although you dont have to refinance all of them, you could start the line using a couple that you own. i know of a couple banks in michigan that will do blanket lines, otherwise i would go to small local banks and ask to speak with a commercial loan officer.
so you’re saying I wouldn’t have to have equity enough in the blanket loc to afford the new properties, the bank would let me just add an endless # of properties to that line as long as they are not above 80% ltv. I’m familiar w/ the idea of a blanket loc for existing properties, i have just never heard of a bank adding properties in w/o purchasing them first. we use equity to buy individual houses and then get loc’s on them to buy the next property, but it has still always been a purchase. So if I take my 6 properties w/ 100K in equity, a bank would let me add in 24 properties for over 1MM w/out ever purchasing them. I’m still a little lost. I like the idea, I’m just not grasping how or why a bank would do this. I would think I’d have to buy w/ the equity from the original loc and then add them in, which I can not do w/ only 100K in equity.
I realize this thread is a tad “seasoned” but I thought I include my 2 pennies…
There are blanket loan programs available to investors that are interested in purchasing 5 or more residential properties using one loan (blanket loan)—here are some details:
Must have => 5 properties to qualify.
Loan amounts Up To 3,000,000
Loan program can be used for purchase, rate & term and cash out refinance transactions.
LTVs up to 80% will be considered
Program allows for properties to be located in different towns.
Partial releases are permissible (Releases will be granted but the LTV must be low enough after the release to keep the portfolio performing).
Properties must cash flow in order to be considered—a minimum of 1.2 DCR is allowed.
Borrower’s Income is not a qualifying factor for loan approval (cash flow of property portfolio is)
miljef,
Realize you are posting in a thread that is very old. EZLoanz hasn’t been seen around here since April of this year. My wife and I just got a loan thru a local bank that is a blanket loan on 4 SFHs on different legal parcels of land, but all owned by the same person. We are using an LLC and got a 5 yr balloon w/ 10 yr amort. Not my ideal loan, but it’s our first in a new market and we’re hoping the lender will be a little more flexible w/ the terms in future deals if we stick with them. They indicated flexibility up front. They did help us out in some ways. They rolled closing costs into the loan. They also did in house appraisals based off comps rather than making us pay about $300/house for appraisals. So overall our fees for this loan will be less than if we had 4 separate ones at a different bank.
Typically local banks service their own loans and don’t sell them to other banks. This gives them flexibility whereas a larger corporate bank will likely have to stick to their published guidelines.
