Buying "Cash Flow"
Has anyone purchased a "package" of 30 homes ( or there about) just for the cash flow? After debt service it's about $6,000/mos. Do I seek a commercial loan that then proportionately attaches to each property or do I seek individual mortgages for each and get killed on closing costs? If I do get a commercial loan, what happens if I sell a few homes? Any ideas?
More than likely, your lender will write a commercial loan and you will give a blanket mortgage for all 30 properties.
The amortization for the loan will depend upon your relationship with the lender, your track record, and your other assets. For commercial loans on residential property, expect the lender to use a 15 year amortization with a 5 year balloon. Near the end of the five years, if your loan performance is excellent, the lender may extend your loan for another five years.
If you sell a couple of the properties, the lender will want you to use some of the proceeds from the sale to pay down your loan balance. In return, the lender will give you a partial release of the lien for the properties you sold.
How will a 15 year amortization affect your cash flow estimates?
Just my view of things.