From the BiggerPockets Blog

 BiggerPockets Blog »

Jump to Forum View All

Click a category below to view different forum categories.

BiggerPockets

General Info

BiggerPockets Q&A, Site Questions, & Announcements

1522 topics, 14445 posts — Last Post 04/23/14, 09:12PM

BiggerPockets Exclusive PRO Area

118 topics, 844 posts — Last Post 04/23/14, 08:28AM

New Member Introductions

10983 topics, 86537 posts — Last Post 04/23/14, 09:32PM

Real Estate Success Stories

398 topics, 6208 posts — Last Post 04/23/14, 08:04PM

General Real Estate

General Real Estate

Buying & Selling Real Estate

5992 topics, 47206 posts — Last Post 04/23/14, 08:43PM

Renters

650 topics, 5861 posts — Last Post 04/23/14, 07:39PM

Get Foreclosure Help - Help Stop Foreclosure Forum

317 topics, 2561 posts — Last Post 04/23/14, 08:28PM

Home Owner Association (HOA) Issues & Problems Forum

238 topics, 1611 posts — Last Post 04/23/14, 04:02AM

Do it Yourself

658 topics, 6316 posts — Last Post 04/23/14, 09:50AM

Reviews & Feedback

Real Estate Deal Analysis and Advice

3709 topics, 29742 posts — Last Post 04/23/14, 09:25PM

Real Estate Guru, Book & Course Reviews and Discussions

1139 topics, 11598 posts — Last Post 04/23/14, 02:31PM

Ask About A Real Estate Company

743 topics, 7344 posts — Last Post 04/22/14, 11:25PM

Real Estate Investing

Real Estate Strategies

Wholesaling

5634 topics, 43953 posts — Last Post 04/23/14, 09:14PM

Rehabbing and House Flipping

3351 topics, 31097 posts — Last Post 04/23/14, 07:49PM

Real Estate Development & New Home Construction

554 topics, 4694 posts — Last Post 04/22/14, 09:17PM

Innovative Strategies

705 topics, 6044 posts — Last Post 04/22/14, 04:06PM

Tax Liens, Notes, Paper, & Cash Flows Discussion

867 topics, 6692 posts — Last Post 04/22/14, 08:22PM

Rent to Own a.k.a. Lease Purchase, Lease Options

699 topics, 4937 posts — Last Post 04/23/14, 08:00PM

1031 Exchanges

143 topics, 1062 posts — Last Post 04/22/14, 03:21PM

Foreclosure Investing

General Foreclosure & Pre-Foreclosure Forums

1691 topics, 11313 posts — Last Post 04/22/14, 09:26PM

HUD, VA, and Tax Sales

416 topics, 3103 posts — Last Post 04/23/14, 02:29PM

REOs

1217 topics, 10603 posts — Last Post 04/23/14, 08:46PM

Short Sales

1539 topics, 13154 posts — Last Post 04/23/14, 08:25PM

Landlord & Tenant Forums

Landlord & Rental Property Questions

7248 topics, 71165 posts — Last Post 04/23/14, 08:50PM

Mobile Homes & Mobile Home Park Investing

639 topics, 5144 posts — Last Post 04/23/14, 07:57AM

Investor Basics

Starting Out

7732 topics, 60680 posts — Last Post 04/23/14, 09:27PM

Investor Psychology

431 topics, 6107 posts — Last Post 04/20/14, 06:04AM

General Real Estate Investing

4730 topics, 37324 posts — Last Post 04/23/14, 09:30PM

Real Estate Investor Marketing

1738 topics, 14148 posts — Last Post 04/23/14, 08:20PM

Commercial Real Estate

Commercial Real Estate Investing Forum

1413 topics, 9005 posts — Last Post 04/23/14, 09:33PM

Multi-Family and Apartment Investing

1123 topics, 9393 posts — Last Post 04/23/14, 09:28PM

The Business of Real Estate

Real Estate Technology and the Internet

Real Estate Technology, Social Media & Blogging

644 topics, 4911 posts — Last Post 04/23/14, 04:03PM

Business Basics

Goals, Business Plans & Entities

833 topics, 7585 posts — Last Post 04/23/14, 08:58PM

Real Estate Finance & Legal

Financial, Tax, and Legal

Tax, Legal Issues, Contracts, Self-Directed IRA

2802 topics, 20136 posts — Last Post 04/23/14, 06:57PM

Property Insurance

311 topics, 2057 posts — Last Post 04/23/14, 01:20PM

Personal Finance Discussion

330 topics, 2754 posts — Last Post 04/22/14, 12:06PM

Loans, Mortgages, Credit Lines

Private & Conventional Lending Discussion

2852 topics, 19844 posts — Last Post 04/23/14, 05:05PM

Creative Real Estate Financing

1220 topics, 8855 posts — Last Post 04/23/14, 05:22PM

Crowdfunding Real Estate

35 topics, 463 posts — Last Post 04/19/14, 06:24PM

Real Estate Professionals

Real Estate Professionals

Real Estate Agents

1217 topics, 8026 posts — Last Post 04/23/14, 07:59PM

Bankers, Lenders, and Mortgage Brokers

442 topics, 1931 posts — Last Post 04/23/14, 09:04PM

Contractors

269 topics, 1690 posts — Last Post 04/22/14, 07:33AM

Local Real Estate

Local Real Estate

Local Real Estate Networking & Recommendations

2016 topics, 11755 posts — Last Post 04/23/14, 08:44PM

Americans & International Real Estate

162 topics, 568 posts — Last Post 04/14/14, 11:19AM

Foreigners Buying in the USA

62 topics, 409 posts — Last Post 04/10/14, 06:27AM

Canadian Real Estate

65 topics, 439 posts — Last Post 04/22/14, 09:27AM

Marketplace

Real Estate Marketplace

Real Estate Marketplace

15083 topics, 54127 posts — Last Post 04/23/14, 09:19PM

Real Estate Events and Happenings

168 topics, 2603 posts — Last Post 04/23/14, 09:33PM

Off-Topic

Off Topic

Off-Topic

2907 topics, 32443 posts — Last Post 04/23/14, 07:43PM

Housing News & Real Estate Market

920 topics, 8391 posts — Last Post 04/23/14, 02:43PM

BiggerPockets Real Estate Investing Summit

97 topics, 1752 posts — Last Post 04/23/14, 04:51AM

BiggerPockets Resources

Forums » General Real Estate Investing » Building a rental portfolio

Building a rental portfolio

12 posts by 8 users

Signup

Real Estate Investor · Blackwood, New Jersey


Hi guys,
Here is my question.
How does one build a rental portfolio of say 30+ properties without tieing up your own money in the process? This is my goal but I see that it may be extremely difficult to get in and out of a property at <70% LTV. The reason I use 70% because this is the current max of a refi set by Franny/Freddie.
If I don't do this I don't see how I could get out without leaving my money in the property. If I left mnoney in say 10 properties I would be out of cash completely.
Maybe I can find mortgage companies that refi at a higher rate but this will of course affect cash flow. I can also look for subject-to deals.
I hear a lot of people say landlords only need a property at 80% LTV minus repairs but I am assuming they are leaving money in the deal.
What do you experienced investors who have a large number of properties do? Do you just have a large amount of cash to tie up?
Thanks for being patients.



Real Estate Investor · Ohio


Joe,

You can buy properties via owner financing, lease option, land contract, sub-2, and even bank loans without using your own money (although 100% bank loans are certainly tougher than they were in the past). In addition, you can buy at a HUGE discount and refi to get money to use on future properties.

You need to buy at a HUGE discount to be successful with rentals. Buying at 80% of the market value less repairs is normally not going to get the job done.

Good Luck,

Mike



Real Estate Investor · Blackwood, New Jersey


Anybody else have any ideas on this?



Real Estate Investor · Amarillo, Texas


MikeOH covered most all of the options. The way I personally accomplish this is to purchase a property at 70% LTV minus repairs and closing. 80% will work but you have no room for mistakes, so you better make sure your are dead on with your calculations. Use a hard money lender. Complete the repairs under budget and refi at 80% of value. This puts roughly 10% back into my pocket. Purchase the next property the same way and pocket the profits. True you are out the cash at the beginning of each project, but you will get it back and it is also an incentive to get it rehabbed and rented quickly.
Hope this helps.



Real Estate Investor · Ellicott City, Maryland


Maybe others know of banks that will do it, but I've yet to find a bank in this market that will do a cash-out refinance without seasoning of any more than 80% of the purchase price. The seasoning is generally at least 6 months.

This means that you'll have to wait at least 6 months to get all your cash out of any property, at which point the banks will generally consider 80% of the appraised value for the refi.


Small_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Telephone: 770-906-6358
Website: http://www.123flip.com
CHECK OUT MY BIGGERPOCKETS BOOKS: http://www.biggerpockets.com/flippingbook


SFR Investor · Wheat Ridge, Colorado


Even with the seasoning, 80% may be a challenge. 75% should be do-able on properties 1-4, 70% after that. That's the new Fannie Mae loan guidelines. I'd be curious if you've found a bank that would go up to 80% cash out.

The hard money/refi route works if you can find good enough deals. Pricey, because of the hard money interest, but its a way to acquire more property with less cash. Further, realize you're really paying the difference between the hard money rate and the permanent loan rate. So, its bad, but not quite as bad as it seems.


Jon Holdman, Flying Phoenix LLC


Real Estate Investor · Denver, Colorado


I have built a rental portfolio of 10 properties using hard money lenders to finance the initial purchase and rehab of the project. I then would refinance the rented property with a 70% conventional loan. As Mike mentioned, you need to be very selective of the property that you buy so that you will be able to get a 70% loan. I suggest looking at the fixed up comps in the neighborhood before buying.

The one hurdle that I have is adding the 11th - 30th properties to my portfolio. Even with the portfolio lenders that I've found, they won't finance any property over your 10th investment property.

Does anyone have any suggestions as to how we can add more rentals?

Thanks,
John



Real Estate Investor


Just a question regarding 10+ properties...

If I have say 6 properties under my LLC, call it LLC #1

and then I start buying under a new LLC call it LLC #2 and I get 4 properties under LLC #2

If I get to a total of 10 total properties(6+4) under both LLCs, is this going to be a problem like John listed above?



Real Estate Investor · Ohio


No, you won't have a problem. When you are operating a real business in a business entity, you will normally get commercial loans. There is no limit to the number of commercial loans you can have.

In addition, John doesn't really have a problem either. The 10 loan limit is normally on the number of loans, not the number of properties. So, he could simply refi his first ten properties into a blanket loan and then he'll have 9 more loans to go.

Mike



Real Estate Investor · Newport beach, California


Originally posted by MikeOH:
No, you won't have a problem. When you are operating a real business in a business entity, you will normally get commercial loans. There is no limit to the number of commercial loans you can have.

In addition, John doesn't really have a problem either. The 10 loan limit is normally on the number of loans, not the number of properties. So, he could simply refi his first ten properties into a blanket loan and then he'll have 9 more loans to go.

Mike




Real Estate Investor · Newport beach, California


my problem is that I am trying to refinance my rental property to get cash out, but I am finding it impossible. I have more than 30% equity, and it is rented out with a small cash flow. but I have debt I need to pay off. I've had the property more than a year, in my LLC. but I have it in my own name/LLC, and don't want to use my husband's income-- he wants me to keep my rental separate. I don't have separate income to show. also, it is on a 2 year note with a small local bank in GA, and I'm worried about interest rates going up, and the necessity of getting a long term loan. should I just give up looking for something that doesn't exist?



Real Estate Investor · Denver, Colorado


The blanket loan that MikeOH refers to is a commercial loan and requires a commercial appraisal. I've looked into this type of loan and it just doesn't make sense to take my 10 financed rentals that have great long term loans and put them under a blanket loan with a 5 year balloon. The solution, while feasible, is not a good alternative. I will continue to look for other ways to add my 11th-30th properties. MikeOH mentioned owner financing and sub-2. I am keeping an eye out for these all the time.

Thanks,
John





Sign up