I have what I'm certain is a very basic question but I haven't been able to find a suitable answer.
Let's say I have a mortgage on the home I live in. Then, I obtain a second mortgage for my first rental property (I don't have the necessary cash on hand to purchase a property outright).
My question is: how do people then go on to grow their rental portfolio? A lender isn't going to allow me to obtain an additional (i.e. 3rd) mortgage, correct? It seems like I'd be stuck until I could pay off at least one of my existing mortgages.
I ask this question because I've seen numerous posts here from people who started out and then, somehow, obtained multiple properties within a year or two. I don't see how that is feasible unless they had a ton of cash initially or they used someone else's funds.
Thank you in advance for any clarifications you might provide.
There are a number of ways you could accomplish your goal:
1. You need to find joint venture money partners. They provide the downpayment and mortgages.
2. Borrow the downpayment from a third party. Make sure you don't put yourself in a negative cashflow because of all the debt.
3. You could get the owner to hold back a second mortgage.
4. You could do a lease option with a motivated seller.
5. You could do a "subject to" with a motivated seller.