Buying Strategy
I recently started investing in SFR's in May with a business partner; we formed an LLC. We both put in equal shares of cash and bought two properties. I liked it so much that I then lent our company another infusion of cash to buy the third property. The LLC is paying me back on a 36 month schedule, and the payment effectively takes most of the positive cash flow from the first two properties. However, the third property will net cash flow about $700-800 bucks after expenses. These properties all cost in the $50-60k range.
Note: I know my numbers look unbelievable. And long term they probably are. But all three houses have been gutted with new systems and structure and so short term I am estimating lower maintenance costs. Add that to extremely cheap property insurance and taxes and you get the numbers above. Its been 7 months with my first two properties and so far so good.
Both my partner and I have full time jobs, so our goal for the LLC is to maximize CASHFLOW, not necessarily ROI, and minimize effort. That said, in the short term, we are fine with realizing $0 in gains in order to grow the business. I'd like to own 6 properties within the next two years, and at the two year mark start taking my profits (about $6k gross). But now I'm at the point where I have absolutely no more cash to invest so I'll have to start looking at other ways to fund the next few properties.
I am really loathe to take out a mortgage because I hate the thought of paying someone else interest and I think origination fees are ridiculous. I have a ton of cash, but its tied up in a 401k. I've got good credit, so I could borrow from Propser or Lending Club, but they only do loans for up to 5 years so the payment would leave me zero room for error on the cashflow for the third property (although, at that point I'd have a fourth, so maybe that is still an option). Plus I'd still be paying someone else interest. I have not had much luck finding a HELOC b/c banks don't want to do that on a property owned by a business (plus that silly origination fee again). I don't like any of my options, but logically I know that most investors go into debt to invest because it gives them a better ROI.
I am also impatient. I want to invest NOW, before I loose my momentum. I know if I would just collect rent on property #3 for a year I'd have a sizable down payment, plus I could probably save up some more of my own personal cash to invest. But I really just want to keep going NOW. So, how do I fund three more properties AND get them all paid off within the next two years in order to maximize cashflow?
I've asked similar questions before, so I think I know what most of my options are. Now I want to know what YOU would do if you were me.