Need BP wisdom on my next lending strategies.
Bigger pockets mentors,
I am looking for your take on my situation and what strategies you suggest I explore further. I have read forum after forum, Blog after blog and decided to get some of these wise answers specifically catered to my situation.
I apologize for my poor writing skills I am dislexic and writing/punctuation is difficult for me.
A little background:
All through college my business partner and my self ran a construction company renovating other peoples kitchens , bathrooms, decks, etc. ( doing all the work ourselves). I Graduated college and had no intention of entering the corporate world. My self and my business partner have business degrees and the construction skills. Through college we also worked as contractors for a REI doing buy/hold & flips. My partner and myself agreed contracting had a ceiling on it we felt was too low. So we planned to transition into REI. Two weeks before graduating college we bought and rehabbed our first rental with our own cash. The following two years we bounced back and forth from doing a high end kitchen and or bath for someone and taking that money and putting it into the next rental. By doing this we have now bought, COMPLETELY rehabbed, and rented 8 single family houses with our own cash. We have slowly almost phased our self out of working on other people homes as our cash flow has increased. The past six months we have spent a lot of effort learning how to work on our business rather than in it. We have come up with current and future organizational structures. business plans. As many systems and processes as we can document so when the time comes that we can climb our own organizational latter. Filling the spot we left should be as simple as handing the new person the guide we have wrote and over seeing.
Our numbers are fantastic when it comes to cash flow / ROI ( not a surprise when you buy cash and do all the work yourself)
Now the issue, Buying these houses all cash, I have not forced my self to understand leverage, financing, and all aspects of raising capital creatively. I know that our next steps will be getting conventional cash out refis on as many of the properties as we can. We have already found a mortage broker who is sure he can get myself and my partner each two individual cash out refis 70% LTV at approximately 5% but beyond that we may need to get creative. I have begun creating a portfolio for private money lenders to look over. Once that is finished I plan to take that to my attorney and discuss the legal aspects of approaching this strategy. I would defiantly begin with my close network of family and friends and then branch out to my previous clients of my construction company. They are most likely accredited and most really liked me and my partner. Some points to note when considering lending strategy:
1) The properties are in an LLC
2) Because we put almost everything back into buying the next properties our income is LOW (Before tax I personally made 15-16k in 2013) my partner is the exact same.
3) I have literally no debt. apart from my CC I pay in full each month.
4) my credit score is 730, partners 760
5) I am 24 years old so regardless of my numbers private lenders & loan officers may be hesitant.
6) I am located in Cincinnati OH.
7) Our properties have an ARV of 45k- 75k (conservative)
8)All but 2 properties have 12 months seasoning
9) our purchase price is usually 40% or less than ARV because we buy highly distressed. We can easily change this strategy if needed.
I re-read my own forum post and thought my question was unclear. I will try to simplify.
Based on the information above how would you maximize growth with the cash out refis? And then when those run out what strategy would you take? I was kind of thinking mixing the cash out refis and private money covering my "skin in the game" with the funds from the cash out refi.
Wow that was long. Any one who made it, Thank you!