Investor · Talofofo, Guam · Member since 2016 · 1 post · 0 votes
Looking for advice on how to acquire the next SFH investment...
My husband and I currently have a primary residence, one condo unit (currently being rented) and are in the process of closing on a REO SFH (which, based on the market trend, will rent quickly). We also have inherited oceanview/cliffside land with no liens. The land has sentimental value and we don't want to sell it. Also, it is not in an ideal rental location so building a rental unit is not a good investment. Aside from the land, the other properties were purchased with cash down and bank financing.
We are now planning how to acquire our next investment home. We don't have sufficient cash to make the next purchase quickly. My questions are:
1) Can we take a loan on the land and use the funds to down the next SFH (essentially obtaining two loans)?
2) Do land loans mirror mortgage loans (interest, payback period, etc)?
3) Is there another way we could finance another property without cash?
4) Or.....Should we wait until we can save enough cash to purchase our next investment home?
Rental Property Investor · Tyler, TX · Member since 2014 · 24 posts · 6 votes
10y
Hey Joleen! I don't know the answers to 1 & 2, but if you can get a title loan for a car, I imagine you can get a line of credit for your land, too! As to 3, you might be able to refinance/take a Home equity line of credit on the condo or your primary residence to get the cash down payment. Also, depending on your debt to income ratio, a bank may pre-approve you for a no/low money down loan. If your equity positions and debt to income isn't in a position to do either of these, you could look for a partner who could front the cash and split the profit or find a hard money lender who would lend you cash at some sort of interest term. Brandon Turner wrote the Book on Investing with Low or No Money down, which seems like it needs to make your reading list :)! As to 4, for my family, (we also rent out our condo and own our primary SFH residence) we do try to save the down payment from our W2 income and do our lending through a traditional mortgages. It's a slower but less risky play than 0-down loans, plus we only answer to ourselves. Our next buy will probably be the last that they allow us on our debt to income, so I will be looking for partners or portfolio lenders in the coming months!