5 paid off rental properties Norther VA. What would you do?

Question

Hello Forum,

This is my first post and have been listening to the podcast for a few months. Seems like this would the place for some advice!

I manage 5 family rental properties in the Northern VA area. My wife owns 3 and my mother in law owns the other 2. All properties are paid off and have tenants. We were thinking about buying more rentals with the equity or just rental income from the properties. Not sure what the best option is for my situation but here are my options that I can think of.

1. Sell the properties to my LLC, owner financed and then take the rental income from the properties to buy more.

2. Refinance the properties to fund new investment properties.

We don’t really need the money and could fund deals, but more money at low rates never hurts and the owner financing write offs might benefit my family in taxes yearly or down the road. What would you do? I’d love any suggestions.

Jesse Baker · Answer

Thank for the quick reply! The first Lien Heloc is a good idea!

Here’s some numbers!

Property #1 Townhome value 550k cash flow $2.6k per month

Property #2 Townhome value 350k cash flow $2k per month

Property #3 Townhome value 400k cash flow $1900 per month

Property #4 single family value 600k $2200 cash flow per month.

Property #5 single family value 1.1 mil cash flow $4500 per month.

I'm mainly looking to have backup cash and get loans based on cash flow from the properties to purchase a multi unit. I have cash for purchase with or without the properties equity. I'd like to lower my income by purchasing the properties in my LLC from my family and doing some kind of owner financing to possibly reduce yearly taxes and capital gains later down the road.

Joe Villeneuve · Answer

Need numbers. Property values. Cash Flows.

Also need to know what the specific financial requirements are for you to move forward into more properties.

Tanner Sherman · Answer

Congratulations, that is a terrific position to be in. I would start by interviewing lenders to see what they can do for me! When you have an advantage they start to find loan products that you weren't even aware existed. One type of product to ask about would be a first position HELOC on all of your properties. This would allow you to purchase a property whenever you want (CASH), and use the cashflow from all of your properties to pay down the HELOC.

5 paid off rental properties Norther VA. What would you do?

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