I'm looking for a little guidance on where to go next in my investing portfolio. A little about where I'm at:
1. I own 3 single family home rentals in Western MI, paid $35k cash for each, they are cash flowing about $5000/year each and current value is around 50k each. They are owned in separate LLC's (single owner) so I cannot refinance them and cash out without putting them in my name.
2. My primary residence is mortgaged at 205k and its worth about 300k. I have a HELOC on that with 45k available as needed.
3. I currently have zero CC or Auto Debt. Credit is about 740. Only about 5k in savings currently.
My ultimate goal is to get to a total of $6000 in cash flowing properties per month.
My question to the forum is what should I do next? I was thinking of applying for a new mortgage, purchasing a fixer upper here in Phoenix, then use part of the HELOC to pay the down payment as well as do repairs. After that I would rent it out and refinance it to get my cash back. Rinse and repeat.
What recommendations does the forum have?
Have you considered selling your existing SFH as turnkey properties to other investors and either moving into higher end properties with leverage or leveraging that equity into a small MFR?
@Joe Campbell You could also look into financing the properties with a portfolio/commercial loan to cash them out. Those types of lenders will, and actually prefer to, lend to an entity. You won't get 30 year fixed rates though!
To echo what @Mehran K. said, you may want to look into a blanket loan. Since your properties are free & clear you should be able to leverage the equity there on the down payment of something larger. The lender will want appraisal's on each property & want to make sure that you will have a decent DCR on the entire package. Also, I have talked to a few lenders that have minimum loan requirements of $500k financed, since it takes just as much work to write a small loan as it does a larger loan. I'll send you a PM with a few of the lenders that I have talked with.
Congrats on having zero cc and auto debt! That will serve you well. I wouldn't have individual properties in separate LLCs. It's cumbersome and redundant. I would transfer 2 properties into my favorite-named LLC. If they are named after the address, get a little creative. Will be easier to deal with 1 LLC with 3 properties in it as far as accessing equity through loans or leverage. Will be a heck of a lot easier at tax time, too!
Thank you all for your suggestions!
@Hattie Dizmond I wanted to keep the properties at this point because they are cash flowing well and in an area where I should see appreciation so I want to hold them for now.
I think I'm going to follow @Mehran K. advice here, I just need to find a commercial lender who will do a blanket loan involving 2 different LLC's and only a 100k value....probably not an easy task. I will most likely use that money as a down payment on another single family rental here in Phoenix where I can manage it myself.
My question the community is this, if I get the cash out with this blanked loan, say 70k I'm going to have to qualify in my own name and then transfer the title over to an LLC for protection....is this what people usually do?
Blanket loans that are done by portfolio/commercial lenders will be allowed to be done to the LLC. Not sure on whether or not two entities is okay, may have to be one entity.
So no, you don't need to have them in your personal name.
I'm pretty sure it's going to have to be in one name and the loan is going to have to be in that entity name with you as a guarantor. I'm in a similar situation, if you find a national lender that will take this with less than 300k value I'd really appreciate to hear who you use. Good luck!
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