Good morning BP people! I have a simple question that may help evolve my business plan that I hoping for some insight on. If I qualify for a primary mortgage of about 150k-180k, will I still be able to purchase say 10 investment homes using the 20% down method if each home is 60k-100k? I have the capital to start purchasing multiple investments, but do banks acknowledge that the tenants are paying towards said mortgages?
@Rich Cee Based on what you described above, this is what interpret when I project the numbers out for what you have available for cash starting out:
20% x 10 homes x 60k (min. each home) = $120k.
If this is correct, I would find out what the maximum number of mortgages you are able to get with your lender (investment properties) and do the following:
1 - Let's say the max is 5, including your own personal residence (also mentioned above)
2 - Buy 2 with all cash, then refinance both of them (that makes 3 mortgages you are holding...your personal + 2 rentals)
3 - Take the money you got out of refinancing and repeat step #2 with two more homes (that will make the 5 mortgage limit)
.....now comes the fun part......
4 - Find a "Credit Partner". This is someone looking to get into real estate investing that has good credit (can qualify for their own 5 mortgages), but no cash...and most likely no time to be an investor.
5 - Repeat steps #2 & 3 with them...with you providing the "Entrance Strategy" (the cash IN), and you new Credit Partner providing the "Exit Strategy" (the refinancing to get the cash out to re-use)
6 - Split the cash flow and any future profits if house is sold.
7 - Repeat step #4 - 6 as many times as you can find Credit Partners.
8 - After the last refi, whenever that would be, you refi you (original) cash out, never really ever "spending it"...just using/moving it strategically.
The answer to your original question of "How many homes can I purchase", is an infinite amount with limits based on available homes and available Credit Partners.
Don't forget that lenders will also want 6 months PITI cash reserves ... so you need to have money to borrow money.
@Dawn Anastasi Not all lenders require those cash reserves. You also only need to show access to them. We've accomplished this by use of the unused balance off a business credit card (LOC) connected to the property.
I like your tagline: "If it makes dollars, it makes sense."
@Joe Villeneuve First off, Thank you for your reply. Your opinion is well respected on my side of the learning fence. Secondly, I appreciate the depth you went into about going as far as I can with what help I summon. I will copy and paste this into my records. I sent you a colleague request and I hope to learn from you and the other good BP crew.
@Dawn Anastasi I will keep that in mind for sure. Thank you!
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