Can I get more properties?

Question

We are currently waiting for our first fix and flip deal to close so we can start work. It's a short sale that was supposed to be approved by the bank but of course there's always more crap and waiting on the bank. Honestly why is it so difficult for the banks to get a simple approval and letter out? Don't answer that, I've worked for large companies and know why getting anything done is next to impossible.

Anyway, the purpose of this post is to ask how we can go about growing our rental portfolio. We currently have 3 rentals, all cash flowing and I want to use the equity in these to buy more property. I keep hearing about reusing equity/cash you currently have in existing properties to buy more. How do I do this? We have a good amount of equity but how do you get at it? Is this a refinance? A home equity line of credit? I figured we can't get a loan to buy anymore because we don't have a regular income.

Do we have to wait until our first flip is done (and maybe more) so that we have cash or can we leverage existing equity? Thanks in advance!

Peter O'Donnell · Answer

Brandon Turner did a webinar a day ago on portfolio lenders. Lots of good info in it. That would be helpful for You.

Gilbert Dominguez · Answer

Erica Nagle,

Well I would say what you are doing now is one way of knowing how to go about it. Have contact with others in your same situation. A blanket loan has been suggested. Commercial lending, a portfolio lender is another.

I am trying a new way for me and that is to start a syndication and contract a specialty firm that does the actual solicitation of other investors. Its all new to me but there are ways to accomplish what we want or need. We just have to start asking around. It might take a while but sooner or later we will find what we need.

The internet is great for digging, keep digging you may just find what fits right up your alley.

Jesse Waters · Answer

Erica Nagleif you are going to stay with SFR's a chat with an investor friendly mortgage broker can be a high yield chat.  I have a guy who I have done a few mortgages through that has been great for gaining highly productive insight.

What we are in the process of doing, since we were in a similar position.  We have 2 quads and a SFR plus I have another town house all as rentals.  I went to my bank and started talking commercial lending with them rather than residential, the tone of the conversation drastically changed in our favor, leveraging our equity through what amounts to a blanket loan.  So, now we have 3 more quad's under contract and will not really have to pay anything out of pocket other than the nominal expenses with getting a property under contract & to the closing table.

If you don't feel like bundling everything in one loan I would certainly look at doing cash out re-fi's to get the liquidity you will need to purchase more, or HELOC's might be an option, however, I have never done an HELOC and have never given it a lot of thought.

Best of luck.

Brian G. · Answer

Erica Nagle I hear you. Im already feeling similar pains on this. But it is exactly people like you and me the ones that can provide opportunities for people like you and me. Did I confused you yet? If we continue doing the traditional way of what other people are doing our predictable way of "expanding" is not going to work. This is the reason why Im starting to become more creative at this. First, forget the banks we already know their limitations, jada , jada. Something else has to do the trick. Second what product drives your market? I know the type of rental property that flies off the shelve in my area. Third, how possible is it to find a seasoned investor ("a you and me") in our respective markets? How do I find me? I want to find a "me" that doesn't want to deal with the property anymore. We must first reverse engineer the process. Ask yourself, 30-40yrs from now, do you want to be dealing with tenants, trash and toilets? Not me. No way. As a 70+ senior what's important to me is cash flow and I don't want to sell neither. I want to find a "you" to extend my own notes on my properties. Seller finance.

Me personally I want 15 properties producing passive income. All 15 free and clear. When I become a senior I will sell some to my kids and keep some for cash flow to support my lifestyle. Significant balances in the bank will have little value to me. I must find a "you" to sell my properties with my own financing. Since I already know your intentions I will leave enough spread for you to make money when you rent it out. No banks. No bureaucracies. Painless process. You deal with the tenants. I'm in Australia fishing for the next six months. Please don't call me. I keep my notes and if you default me I foreclose on you. A short text to my attorney and we file the next day. I have other properties producing cash flow. I need you but dont depend on you to live. That simple.

Is not too hard to find people willing to do this - you just need to find a few "you and me". We all run into them daily. I'm already connecting with some of them.... All the best!

Erica Nagle · Answer

Calling in a loan? Please elaborate

Blanchard J Ross · Answer

Simply put you are dealing with egos, politics, people who think they have power over you. The list goes on. Welcome to the world of dealing with banks. Oh and don't forget, they will cut off your supply of money at any time, just because they can.

I've known at least 2 of my friends who lost everything and went belly up because of banks calling in their loans.

You have to think more creatively and rid your business of bank participation. You can also try to research "Private money" as a source of funding your deals. And I don't mean "hard money"

As you can imagine, virtually every investor falls into this dilemma. I know of folks out there though

who decided to learn the art of investing without banks and manage to accelerate their holdings quicker than they could ever imagine. It's a matter of learning about creative financing, seller financing. Learn the nuances of this segment of the market. It's a great opportunity not to be ignored.....Good luck

Can I get more properties?

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