How do you buy multiple houses a year?

5 Replies

I already own 1 1st house. I will be renting it out soon. If all goes well I'd like to continue to buy more homes, but I'm confused as to how people buy multiple properties a year.

Do you have a business and buy them that way? Or do you do it personal with your personal credit score?

I have darn near perfect credit but dont want it to slide by buying a bunch of properties.

I also dont want to just start a business without knowing if this is something I'm cut out for.

So how do people do this?

 @Toria Posey:

It's done 1 of 3 ways.

1- All Cash sales. Not many people have the funds so this isn't feasible for most.

2-Buy multiple properties through Conventional Lending (Fannie Mae/Freddie Mac) type of Conventional loans, which I don't recommend. Although you get the best rates, they count and recalculate your overall personal debt ratio each time, making it harder to qualify; they use personal income and tax returns as part of the approval process, you can't use all of your rental income to qualify for the next loan. You can't buy in a company's or a Trust name to protect you from liability and lawsuits; you can't combine all your different mortgage payments into one Portfolio Loan; and you're capped at 6 and 10 properties depending your program.  But despite all the drawbacks, many people still do it.

3-Use Non-QM (Non-Qualified Mortgage) products AND use BUSINESS CREDIT to supply the down payment.  First with your near perfect credit score you can enroll in a program which can get you 5 or 6 business credit cards, which you are the personal guarantor.  You can advance the entire amount and pay back the minimum each month often o% interest 6 months to a year.  You then just transfer the funds to another card and start the process all over again.  Use the advance funds as down payment using a Non-QM loan.

The advantages of Non-QM loan would be that you can buy in a company or Trust name to protect you from liability, you don't have to submit any pay stubs, tax returns; they don't calculate your personal debt ratio; approval is made primarily on the asset's ability to generate income; you can combine all mortgage payments into ONE simple payment; you're never capped at how many properties you can own and often there's no Seasoning and Sourcing of Down Payment.  In other words, they don't ask where it came from and how long you've add it (most don't at least). The drawback is that these loans are more expensive requiring 20% down payments; costing upfront 1-2 points maybe more; and slightly higher interest rates than conventional mortgages.  In my opinion its worth it if you plan on doing this full time or at least draw a significant amount of income from it.

There you have it.  I'll PM you if you want to discuss further!

@Account Closed Hi Toria! Great question, I am in the same boat as you, kind of. I have a primary residence here in CA and just purchased my first rental property in MO. I’d like to kickstart my RE career and buy multiple homes as well. 

@Herndon Davis Hi Herndon! Wow, great info! I’ve never thought of using business credit I will have to explore this topic some more. 

I bought 10 in 5 years by buying a new primary every year for the Better rates and terms and also one - 2 rentals per year. This was seriously slow and steady compared to today’s pace you see investors grow. Ain’t looking to be biggest or fastest. 

@Toria Pose

You purchase as many as you can under your Perosnal credit to get the best rates once your DTI is maxed out u switch to private / commercial financing through an LLC. Some people purchase 4 unit builds and refer to that as 4 properties, it's truly one property with 4 doors.

Previous replays were spot on if money becomes an issue you can utilize business credit for down payments and repay with your rental income.

I’ve done all three strategies mentioned above...owner occupied + kept moving, purchased with conventional mortgages, and have used non-qm loans. Have also used portfolio money, hard money, and have purchased with owner financing.

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