Let's just say that there was a theoretical rental property owner that had 7-8 SFR and Multi-family properties that were all owned free and clear and these properties all appraised at close to $1.5 M. If this was the case and this owner wanted to purchase another SFR in an area they felt comfortable, what actions might be taken next? Note: this theoretical owner does not have piles of cash sitting around for a down payment on this SFR. What could be done next to get this new property purchased?

Theoretical person thanks you in advance. 

1.5M is piles of available cash. Try to get him to understand that he does have piles of cash sitting around losing tons of income daily.

He is probably financial illiterate so you will need to try to educate him on how money and finances work. 

If he insists on being a ultra conservative cash investor don't waste your time trying to convince him of anything. Move on.

If they have that many rentals free and clear with that net worth, what on earth are they doing with their money that they don't have enough cash for a down payment?  Seems like the income from just a couple months worth of the rentals should suffice.

kind of silly really.. they just do whatever they did to acquire the 1.5 mil.. unless they inherited it.. and have no clue..

then it might be wise to sell it all at the stepped up basis and put the cash in REITS or other managed investments and get out of real estate all together.

Is this a trick question? Leverage some of the properties or sell them. Save some of the rental income and use that. 

put a loan on one or more of the properties and use the cash for the purchase/down payment

@Eric S.

The first thing I would do is get the SFR under contract. This time though the guy should intend on purchasing the house with a mortgage. A conventional mortgage requires 20% down for non-owner occupied. So if this theoretical house costs $150,000, the person needs $30,000 to make the purchase.

Next find a lender that will allow you to use equity in your other properties as the down payment. This will allow you to come to the table with very little cash out of pocket.

Theoretical investor had a real job that originally allowed him to acquire and pay off the rentals. Since that time the investor refinanced to a 10 year mortgage on his personal residence and quit the good paying job to become a parochial high school Spanish teacher. The pay is poor and after paying for family benefits the teacher nets  $480 a month. Fortunately the job satisfaction is quite high and family time he gets is important to him. 

Said real estate investor is monitoring the posts. He appreciates them all and had me purposely sound naive as he wanted to hear people’s true feelings. 

Thanks to all.