First investment property - closing May 1st - looking for strategy to pursue the 2nd?

5 Replies

I'm locked in to settle on my first investment property May 1st. 

It should cash flow around $500/month... using semi conservative assumptions. I'd be happy to share numbers if interested. 

My ultimate goal is to have a portfolio of 10 properties- cash flowing at $500/month  each property. Are there any strategies to leverage the equity in the first property to purchase the   next one?

But, of course...

The process you are wondering about is called "bridging". If you have a lot of equity, there are a number of techniques you could pursue with conventional lenders. If you have a but of equity, but not too much, then you may have to wait until you have several assets, at which point you can get creative with blankets and cross-collateral.

Hope this helps,

Ben

Congratulations, I have a closing on the same day!

For taking out equity, it will be hard in short-term, so maybe you will wait for several years when it makes sense. The only way to do it quickly is: 1, you buy with high discount, 2, you do some rehab to increase rent/value of the property. In either case, you have a chance to get a much higher appraisal and you may get your equity out for another deal.

Thanks Ben & Congrats Zach!

I may be able to squeeze the equity and add some savings to get me to number 2.

I got this property at a discount since it was a short sale. It needs little rehab but should leave me with close to $30k in equity.

I should have the current appraisal early next week but won't factor for the rehab I need to do. 

How soon would I be able to get that equity out for another deal? 

Ben can you explain bridging. I have a duplex with zero mortgage on the prop. Has a cap rate of 12.5. My problem is I had a bankruptcy 5 years ago and it's killing me. No lenders want to give me a heloc against it

@Vincent Matraxia

If you filed Chapter 7 or 11 you can finance with conventional financing 4 years after discharge. If you filed Chapter 13 you can finance with conventional 2 years from discharge and if you are still in the chapter 13 bankruptcy.... you could possibly still qualify. You could do a cash out refinance if you have 4 or less mortgages, including this property. Hopefully this will help you.

@George Elchaar

Great deal with the cash flow. You may also be able to do a cash out mortgage as well, depending on the situation. You would need greater than 75% LTV equity in the property to do a cash out with conventional financing.

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