Fishkill, NY · Member since 2013 · 88 posts · 36 votes
What's the best next move for me? My portfolio consists of 11 doors in 5 buildings. One building is 6 years into a 30 year mortgage, and we're breaking even on it. The other 4 buildings are each 95% paid off (one is completely paid off) and the cashflow is great. However, I would like to grow the portfolio and I'm wondering if I should double down with a cash-out finance on the 4 buildings that have equity. I'm just not sure exactly how the math would work. If I can wind up doubling the portfolio size and retain my cashflow that would be great, but I need to ensure I can then grow that cashflow over time as I begin paying down the debt. Again, not sure exactly how that would all work out, I'm hoping some of the more experienced brains here can shed some light on the best way to go about this.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y
I'm similar to your equity ratio, Aaron just with more doors.
I'm paying off all the commercial apt bldgs because they are in LLCs and annual reporting is a pain. High equity positions in LLCs doesn't scare me as much from an asset protection stand point.
That said, I chose to grow organically. I've taken all that cashflow and built up my acquisition fund. Sounds like you could choose to do the same.
If not, I'd avoid blanket loans. Too hard to unwrap. Congrats on having options!
Investor · Somerville, MA · Member since 2016 · 150 posts · 70 votes
10y
So it sounds like all in all you have about 75% of your portfolio owned outright and you have a positive cash flow coming in. Doubling your portfolio is very much so within reason with this much capital available, however you need to assure that getting financing on your properties makes sense, and you will still have a positive cash flow after the financing is in place.
I'd start off by doing out the math as to how much money you can afford to put towards a mortgage each month for these properties, dwith that number in mind go to the bank and speak with a mortgage broker on the best options for your situation/properties (whether is be a portfolio mortgage or individual mortgages). After you have the preapproval start searching for those positive cash flowing properties.
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
10y
I'm similar to your equity ratio, Aaron just with more doors.
I'm paying off all the commercial apt bldgs because they are in LLCs and annual reporting is a pain. High equity positions in LLCs doesn't scare me as much from an asset protection stand point.
That said, I chose to grow organically. I've taken all that cashflow and built up my acquisition fund. Sounds like you could choose to do the same.
If not, I'd avoid blanket loans. Too hard to unwrap. Congrats on having options!
Investor · Detroit, MI · Member since 2016 · 211 posts · 144 votes
10y
Your premise for any kind of financing is whatever you do needs to earn you more money than what it will cost you on a monthly basis. I am not any kind of mortgage financial expert so I will not speak about specific mortgage arrangements or strategies available to you. There are others that can better clue you in such strategies as portfolio lending.
I just sit down and write down possibilities once I know what the borrowed money will costs and include all related costs against my anticipated earnings.
In your case you would consider what your existing net cash flow is then determine if what you propose to do would actually realize for you an increase in that net cash flow. That is what you would rely on not any anticipated growth in equity gains from your proposed new purchases. Although you should obviously consider that as well and work toward optimizing the possibility of realizing gains in future equity from your proposed newly acquired property (ies).
Real estate investing is usually a time based strategy so don't be in a hurry. Do everything you can to work everything out on paper first making sure your figures are as accurate and reliable as can be.
Once you do that if you can determine your move would be a profitable one for you then consider what making the move would mean to you personally, how the move would affect your life style, your time, and daily life experience.
If it looks like it would a win win situation for you then that would be a strong indication it's a greenlight but if not be ready to back down from doing it.
You have got something working good now do not do anything that would or could jeapordize that.