Access to Very Cheap Money
I'm 27 and I wanted to get a few rentals under my belt before approaching my Dad about him funding a rental purchase. I used traditional financing on the first two purchases and they have turned out quite nicely. I put 25% down on each and cash flowing $300/m on each with 15 yr mortgages. These are 3 bedroom homes in prime areas.
I'm under contract to buy my 3rd rental with traditional financing. I'm doing a 30 yr mortgage on that one and expect to cash flow $580/m. It's also in a prime area.
I called up my Dad and mentioned my recent deals and asked if he knows any people around his age that have made a substantial amount of money in real estate in hopes I could meet with them about getting some private money. He mentioned two names but then also mentioned his connection with his bank.
You see my dad has been a rice and crawfish farmer for over 40 years and within that time he has taken out multiple million dollar crop loans and successfully paid them back. Needless to say he has a great relationship with this bank. Most of his land is paid off so it is very easy for him to make a quick phone call and get a line of credit to purchase real estate for cash.
The lender at the bank said we could get max $300,000 at 7% for up to a year whenever we want. No origination and no points. I was ecstatic to say the least.
My plan is to purchase properties at 70-80% off and then refi either in my personal name after 6 months of seasoning or with a different local bank right after purchase that offers 20 year amortizations. I feel like I won't ever have to pass up any more good deals and the sky is the limit. Only thing I'm missing is a good deal!
I started making calls to local wholesalers and will start making low offers on MLS properties this week. I'm 27 now and my goal is to have 30 SFR's before the age of 30. Let me know your thoughts and experiences with this strategy.
Thanks!