How do you finance multiple investment properties

Question

Hi - As I explore REI investing in couple of markets for renting out (buy and hold) on cash flow, wanted to get some ideas on financing.

I assume some of the seasoned REI veterans here buy/close cash deals but what do others do? I read few threads where folks were discussing having 3 or 4 rental properties and going on #5.

How do you manage financing multiple properties?

1. Is it advisable to get multiple mortgage loans in a short span of time (assuming your credit and income can

2. Is there a way to get one big loan from some lender to finance all of your properties post aquisition - like a refinance under one loan

3. Or is there simply a different way to go about this?

Would love to hear financing strategies from folks who don't put all cash but manage multiple properties in multiple cities across the country.

Thanks!

Marcus Auerbach · Answer

Brandon Turner said once that he invests where he has a local team he knows and trusts and that a great PM will get you better results in a mediocre market than some PM may get you in the best market in the country. Know where you invest and build a great team!

Shyam Sundar · Answer

Thanks Jeffrey and Marcus for the perspective. Right now mine is a small portfolio - 1 own, 1 rental with possible 2nd rental acquisition on the way. I can cover DTI the conventional route, was just wondering if there is a simpler way than having to deal with 3 lenders and associated paperwork.

@Marcus Auerbach interesting perspective on diversification. I have been approaching this with a not to put all eggs in one basket mindset and a lot of it is possibly influenced by FOMO also I think. I hear about Austin or Dallas and FOMO kicks in. My job takes me across the country seeking better opportunities, so thus far the two I own are places I lived in. This is the first time I am venturing out.

Marcus Auerbach · Answer

@Shyam Sundar - as long as your DTI allows it there is no problem with multiple residential loans, thats the gov backed 30 year fixed type. If you go commercial you can bundle a package of properties under one loan, also cuts down on paperwork, payments etc. Just make sure you are not planning on selling individual properties from that bundle. I used to finance them one by one, when I do refi's I bundle them. So it's really case by case. We usually buy cash, finance later and it's all local here in Milwaukee. I don't think it is good to invest in multiple states, just pick one and really learn the market. Every time you go to a new market you are a rookie with no idea competing with locals. Diversification is overrated!

Jeffrey Edwards · Answer

There isn't 1 right answer because everyone's situation is going to be different with finances, money, credit, etc.

I think that going conventional mortgages starting off is the way to go until you run out of DTI for the conventional banks to lend.  Then possibly find a private lender or commercial lender to keep going or package your existing loans.