Hi, I have had to be a creative investor to get where I am since I do not have a lot of cash, but I now own 4 properties. I made my most recent purchase which was a foreclosure that had water damage. By being a loyal bigger pockets subscriber, I had heard about a loan program that worked with the house I wanted. I knew it had good bones and I even stole the house from a cash buyer. I bought the house for $120,000 and put $30,000 into it with the loan I used. Before I even closed and did the work, my house had appraised for $230,000. I knew I had to buy it for the equity and my gut was right. I have now been bitten by the real estate bug and want to buy my 5th house, however I am not sure how to go about it. I think I will get approved for another loan. Between my 4 properties, I can only get about $64,000 in equity. There are some great rentals that I could pick up for $50,000. Should I combine my mortgage to pull the equity out and become a cash buyer or take out another mortgage? Does anyone have any suggestions?
@Sarah Taegder Congratulations on the great buy.
If your income + rental income can support a purchase, then I would recommend to do what you have done so far. Use the knowledge you have gained and repeat.
If I was in that situation, I would use OPM and exhaust that before I dig into my equity. Then after equity is dry, get back to creative financing.
What Type of loan were you talking about ? What bank? More details please?
It really depends on whether you can get financing for the 5th house. Depending on when you purchased the prior 4 and what your income/expenses are. You should also consider the closing costs of extracting funds from multiple properties (appraisals, lenders title, bank fees, etc) vs just one purchase financing costs.
@Sarah Taegder - you should be able to get the financing you need for a 5th property if you go commercial rather than residential. Debt to income becomes a non issue. you will simply need 25% cash to put down which it seems like you have that in equity and a good enough FICO score. Feel free to reach out to me with any other questions.
@Sarah Taegder : I agree with @Eric Le in that I would start looking around for friends and/or family because you are building a track record. Then if you ever see something you need to move on you have the capital on hand to execute. Plus, word will travel fast that you took care of someone. Happy hunting.
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