Critique my financing plan for 2017

[Joseph Weisenbloom]

2016 was a huge year of growth and learning for me. I was able to go from 2 to 9 units using the BRRRR method. I currently have 3 properties under conventional mortgages and 1 paid off. One mistake that I made was I purchased a property that wasn't zoned properly. Its a duplex in a single family zone. This means it doesn't meet guidelines for conventional financing and thus is currently unfinanced. I would like to tap that equity and keep the growth train going. My goal is to hit 20+ units by the end of 2017.

I like the idea of portfolio lending because it expedites growth through no seasoning period. The velocity of money appeals to me but I don't want to get too big for my britches. I would also feel guilty for not using up my additional 7 potential fannie mae mortgages with current low rates That being said I will definitely be refinancing these with a blanket loan when I hit 10 properties so it may not matter. Why would I want to focus on getting low rates with fannie mae when I am likely to refinance it within a few years?

Below are the options I see ahead.

1. Rezone: spend the few thousand and 3-6 months of my time to have property rezoned so I can get conventional financing. (Slow)

2. Get a LOC on the paid off house to acquire more cheap properties in cash to rehab. Then move rehabbed houses to conventional financing. (Medium)

3. Get the paid off house refinanced with long term portfolio loan. Ditch conventional financing all together and find portfolio lender that will allow me to grow without seasoning periods. (Fast)

4. ???? Any other financing strategy you can tell me about???

[Ralph R.]

Ishviyan D. I use portfolio loans for several reasons. The ones I get are 4.65% amortized over25 years with a 10 yr balloon. I can have the property in an LLC. No limit of loans. I do not need 6 months of reserves for a bunch of properties. I choose to reinvest some ( not all) of that reserve money. They loan based on a property's ability to pay the debt. Less emphasis on MY ability to pay the debt. Commercial loans ( lines of credit and credit cards) don't show up on my personal credit. The lenders arnt bound by a bunch of Fannie/ Freddie rules so neither am I. This makes them more flexible. I don't know who quoted you 7 % but I don't even pay that for seller financing or private money. I like the 25 year am schedule too. Most investors refi every 7-10 years and it makes a little more equity you can re-fi out. There's no tax on this money. (Save for Capitol gains if you sell without a 1031 exchange.). RR