Starting out with financing 5 - 10 in mind

6 Replies

Hello,

I currently live in the Portland Oregon area, and am planning to begin investing in out of state real estate in 2018.  Knowing that I want to be able to scale the business beyond 4 mortgages, is there anything that you would recommend doing at the start, to structure the business in a way that will make it easier to obtain future financing?

Some of the advice that I have heard is to keep the properties in the same geographic area to make it easier to obtain portfolio financing.  I am open to considering a lot of different regions, but are some better than others for obtaining financing?  For example, if Memphis has a lot of turn key activity, is there also a banking / financing scene in that same geographic area that caters to the industry?


Thanks,

Josh

Originally posted by @Josh Vernon :

Hello,

I currently live in the Portland Oregon area, and am planning to begin investing in out of state real estate in 2018.  Knowing that I want to be able to scale the business beyond 4 mortgages, is there anything that you would recommend doing at the start, to structure the business in a way that will make it easier to obtain future financing?

Some of the advice that I have heard is to keep the properties in the same geographic area to make it easier to obtain portfolio financing.  I am open to considering a lot of different regions, but are some better than others for obtaining financing?  For example, if Memphis has a lot of turn key activity, is there also a banking / financing scene in that same geographic area that caters to the industry?


Thanks,

Josh

 Hi Josh,

5-10 isn't really a big deal. Fannie allows it. Work with a lender local to the real estate that doesn't have a lot of overlays. :)

@Josh Vernon

Memphis has a ton of lending options. Smaller banks are what I have had success with. Also, Turn-Key properties aren’t the only option in Memphis. Be sure to source your properties well! There are many options in Memphis!

@Josh Vernon There are all sorts of financing options. Can't speak for all of them but many turnkey companies have a bank they recommend as it's usually someone who knows their business model, the type of properties, location, etc. There's a relationship there. 

If you're looking for memphis turnkey and/or financing talk to @Account Closed . He's got some got some interesting things going on there. 

Hello Josh!

I am a real estate agent in Portland and although their are still decent investments in the area I definitely understand the desire to dive into out of state investing (as I have done some myself). I like Nebraska for good buy and holds but there are many other places like Dallas and Memphis that are great for investing. I would definitely suggest keeping your out of state investments in one area. One major benefit from that will also be the ability to utilize one management company and if you ever do visit the properties it is an easier process. I know of many people that prefer to diversify their real estate investments but to begin with I would suggest sticking with one area for sure. 

Any area that has a visible investment market with high returns will likely have a banking/financing scene that is able to represent both out of state and in state investors. I would definitely suggest connecting with an investor friendly agent in the area, maybe @Dean Harris , and they will be able to point you in the right direction in regards to financing. Best of luck to you! Stay active on Bigger Pockets so we can see your journey and so you can learn from some seasoned investors. 

@Josh Vernon If you are buying turnkey, and work with an investor friendly lender than you shouldn't have any problems going to the 5th mortgage and beyond as long as you understand a few things. Qualify the lender to make sure they give you income credit on the home from the rent (usually 75% of gross); your required down will go up 5% on the 5th - 10th mortgage (ie: 20% to 25% on SFR); and you will need to keep extra reserves. I believe the reserves on the 5th mortgage and later have to include covering 6 months of all mortgage debt - as opposed to just the one on each of the first 4.

Originally posted by @Josh Vernon :

Hello,

I currently live in the Portland Oregon area, and am planning to begin investing in out of state real estate in 2018.  Knowing that I want to be able to scale the business beyond 4 mortgages, is there anything that you would recommend doing at the start, to structure the business in a way that will make it easier to obtain future financing?

Some of the advice that I have heard is to keep the properties in the same geographic area to make it easier to obtain portfolio financing.  I am open to considering a lot of different regions, but are some better than others for obtaining financing?  For example, if Memphis has a lot of turn key activity, is there also a banking / financing scene in that same geographic area that caters to the industry?


Thanks,

Josh

Keep your DTI low & do not quit your day job! You should be able to get up to 10 mortgages. After you hit 10 I would then look towards commercial financing.