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Question

So May 2023 I bought my first duplex and house hacked for a year now I rent out both units. How do I use that one property to acquire a second and how do I go from 2-3 and 3-4? Is it just a waiting game until there is enough equity?

Griffin Malcolm · Answer

Open an LLC and apply for a small business line of credit from Key Bank. Hit up Saima on Route 9 in Clifton Park. She's a beast and you'll likely get approved which will give you a revolving source of funds to keep growing

Jonathan Soto · Answer

congrats on the first duplex. easiest will be house hack your next property. you can go higher in units up to 4 but just need to occupy the property. lets connect if you need guidance, i house hacked a few times

Griffin Malcolm · Answer

They're prime + 1% or something like that. I was unfortunately denied as of yesterday, but she said it's because I am a new customer for Key. She said to get some activity going in my account and we can revisit in a month to reapply. I imagine for people who have had accounts there for a little while would be approved quickly.

Also on the cashout refi definitely hit up Community Bank. They're doing an ungodly 90% LTV on cashouts. We just closed on my latest one last month with those exact terms.

Steven Luttman · Answer

Griffin what terms are you seeing on products like this?

Steven Luttman · Answer

Tyler,

Due to the property no longer being a primary residence (both units are rented) the best terms on a cashout refi will be 75% LTV. Unless you've done substantial improvements to the building or used a large down payment when buying, it's unlikely this will work.

Perhaps your best move is to find a new primary residence that is 2-4 units and repeat the process. Be sure your lender is comfortable with this, as many fear giving folks primary loans for properties they view as having a high probability of being turned into a purely investment. This can be done, it just requires finding the right lender. If this doesnt fit with your goals, it's time to bring on a partner. You've demonstrated success on your current duplex, so friends/family may be excitted to join in on the next.

Congrats on the success so far,-Steve

Aristotle Kumpis · Answer

Yep. You can't pull money out if there is no equity. Most lenders will let you use up to 70% or sometimes even less. So it's a waiting game for that property until you have enough to do a cash out refi. Typical equity build up time is 5 years, depending on your market.

But can you purchase another rental using your own capital? If so, then you can start looking for another one.

Nate Monson · Answer

Hi Tyler,

Since you did a house hack for your first property, I think the easiest next move would be to go house hack another one. That would be the lowest barrier to entry in most scenarios. If you're comfortable living where you are, equity in your current property or your savings rate would be the two other ways to get your next one which is going to be much slower. Maybe an outside the box idea would be to try to force some equity by making some improvements in the house you live in. If you have the ambition, you can figure out almost anything now a days through some youtube research.

Good luck!

Mike Fingleton · Answer

Hey Tyler,

First off, huge congrats on your duplex... making that leap is no small feat! I remember back when I got my first property, and the itch to expand was real.

You asked if it's just a waiting game until there's enough equity. Well, not necessarily. There are a few strategies you might consider to accelerate things.

One option is a cash-out refinance. If your property's value has increased since you bought it... given the market trends in Albany, that's quite possible... you could tap into that equity sooner than you might think. From what I've heard, local banks are sometimes more flexible than the big guys.

A buddy of mine managed to snag a HELOC on his rental property, which isn't always straightforward, but it opened doors for him. He used it to put a down payment on his next investement.

Have you looked into partnerships? Sometimes teaming up with another investor can help you scale up faster. I had a freind who partnered with someone in a similar situation, and they were able to acquire their third property much quicker than going solo.

There's also the BRRRR strategy... Buy, Rehab, Rent, Refinance, Repeat. It can be a bit of a juggling act, but it’s a method some investors use to grow their portfolio without waiting years for equity to build.

I guess what I'm saying is, it's not just about waiting.. it's about finding creative ways to leverage what you already have. If you ever want to chat more about this... or if you're curious how these strategies play out in markets like Austin or Scottsdale... feel free to reach out. I'm always up for swapping stories and ideas.

- Jasper / Pat AboukhaledTurning investment visions into reality in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

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