Stuck trying to get number 4

[Jacob T.]

I keep scratching my head on how to move foward. I lost everything 4 yrs ago in a divorce and I am trying to inch my way back and make a good future for my kids and family.  Here is my scenerio. I am hoping someone can have some insight on how to get another loan.  I have been able to aquire 3 properties so far. Currently I live in my girlfriends house who owns her own house but ill explain my properties first.  (this is all in MA.)

1. The first was a duplex That lived in for two years and then fully rented. Total rent $2050. Mortgage (VA) $250k 30yr fix @3.0% $1345/month . Havent bought appraisal, I know its not accurate but for what its work Zillow says $350k. Moved out after 2yrs.

2. Second property was SF Condex (no HOA) closer to work and newer second job. Renovated and moved out. Total rent $1700. Mortgage (VA) $182K. 30yr fix @ 2.65% $1100/month. Zillow says 209k but I have renovated and suspect ~220k if I bought an appraisal, perhaps more based on wathcing the area daily for over a year. Lived in for 13 months and moved in with my girlfriend to different property.

3. Third property is a Condo bought off family member for mutually beneficial arrangement. They sold to me for balance of the mortgage (100K) and allow them to live in and retire and I cover the mortgage to reduce their cost(they pay HOA only). My benefit was the equity. Mortgage $103K 30 yr fix convential @3.25% $656 payment a month. I bought an appraisal 3 months ago and it came in @ $245k. Its most likely Higher since last month the neighbors sold the same type of condo for $270k. The downfall this is i am negative cashflow but it was worth it to me to help family firstly and also the equity was worth it so it seemed to help us both.

I make a meager wage on w2 jobs that i have held for over 2yrs. ~85k. I 8k on a car loan and 9k on a credit card. the Problem seems to be my debt. I am making steps to try to pay it down fast and save to get to 20%. But it feels like its ging to take forever. I got this far with very little money down. Can anyone suggest how to move foward? 

Im 36 and I am hoping to get at least 10 properties by the time in 40. I hope to have my primary home with my girlfriend paid, a vacation home for our family, and enough cash flowing properties so I can be them the most and not miss important things like ball games and stuff like that. Any insight on the next play is greatly appreciated. Conventional bank said DTI wont work. Looking for other options.

[Jacob T.]

Thanks Kevin, I will reach out today! Appreciate the reply. 

[Andrew Freed]

@Jacob T. - Great question! It sounds like you have a good amount of equity in your rental properties. You could always look into a RELOC on one of your investment properties. They have RELOCs up to 75% LTV so you can grab equity on a line of credit for the properties you have a ton of equity in. For instance the condo.

RELOCs have some fantastic terms (interest only first 10 years then remaining 15 years is PITI) and you can combine the RELOC funds with conventional lending for your 20% down. That is how I plan on expanding in the short term. Keep my sexy first lien low interest loans on the properties and access the equity via HELOCS or RELOCS. I believe Webster bank offers such a product in Mass.

Feel free to reach out to me directly if you have any questions. I too invest in Mass, mostly in the Worcester area.

[Andrew Postell]

@Jacob T. so the question you are asking here is the question we all have - how do I keep this train moving when I will eventually run out of money? I mean, even if you have $1,000,000 your limit is just higher than ours....eventually you will run out of money too. ESPECIALLY if you are putting 25%-15% down using a standard loan. Have you read up on the BRRRR method yet? That's the whole concept with that strategy - buying properties with less out of pocket. The other strategy is just buying a primary home every year or so. Your rental income should be used by your lender - if they aren't using it, there are plenty who will; so go and find a different lender. Your DTI from your properties should NOT be a factor. I'm glad to see you have 2 VA loans. I wish more of us veterans would go that route. But there are plenty of strategies for you here. I hope all of this makes sense. Thanks!

[Jacob T.]

@Andrew Freed thanks Andrew! Happy to see someone in Mass. It's challenging trying to find deals up here. Thanks for the tip on Webster. I will have to research the HELOC/RELOC pros and cons. I guess my knee jerk reaction is whenever I pull out equity and try to run numbers it completely kills my cashflow for each property so I'm not sure if I'm just running the numbers wrong, the market really is that thin for deals, or I'm conceptualizing it incorrectly. What is the minimum acceptable cashflow you accept for yourself on one of these leveraged properties?

[Jacob T.]

@Andrew Postell thanks so much for the post. I have read up on BRRRR but kind of after the fact. I guess the rookie move I made was not refinancing with a cash out while is there BEFORE moving our because the primary resident rates and LTV threshold changes as I'm sure you know. Now when I try to run numbers the amount I can pull and the loan amount doesn't seem worth it. I've only done it quickly on the phone with a couple loan officers so I'm sure I'm missing something. I'm just trying to keep my cashflows with enough cushion to account for looming market correction if it does happen. That's important to me. I plan on keeping these long term maybe sell a few eventually to pay to off primary house and get a vaca home for family and good memories.