Struggling to understand some basics...
Hi all,
I'm new to the forums and real estate investing. I currently own one turnkey triplex that I bought FHA. My goal is to employe the BRRRR strategy in my local market (Spokane, WA). However, after talking to a few lenders, I'm having a bit of trouble understanding how all of the podcast guests got started so quickly, often with very little money.
A little context about me before I ask questions:
- I worked in law enforcement and teaching in my 20's, during which I didn't make much money. I was carrying debt until a year or two ago.
- I have moved quickly in my new career. Now I'm cash poor ($40k liquid but saving fast) relative to my W2 income (over $100k net, annually).
- I don't have many expenses and am saving quickly. My credit score is almost perfect.
- My current triplex is on an FHA loan and cash flows a few hundred dollars a month, but I put it back into principal.
Here's what I learned from talking to a few lenders and banks:
- The lender I used for the first loan allows up to 10 Freddy/Fannie loans. After that, I have to get into commercial loans or private money.
- I can get a rehab loan and use it for BRRR, but will need 6 months of seasoning on the loan before I can refinance my down payment out.
- In my area, according to a local lender, there aren't any banks doing portfolio lending that will be less aggressive than Freddy and Fannie.
- The two banks I talked to said that I'd qualify for around $25k unsecured lines of credit. Qualifying for a $100k unsecured LOC would require "around a million liquid".
- My takeaway was that the best velocity I can hope for is 1 house per 6 months. This is a bit discouraging considering the fact that my goal is to own 40 doors in the next 7 years.
Here's what I'm having trouble understanding:
- I've listened to podcasts where people with less liquid assets and far less income than me bought lots of houses in the first year or two of investing. How?
- A couple people mentioned taking out unsecured lines of credit to get started. How did they do this? There's no way my lender will let me use an LOC for down payment.
- A $100k line of credit would allow me to get started quickly and buy far more than two houses per year, but are there places I can get ahold of these?
I know this is a lot, but any info would be much appreciated. Thanks in advance for the help understanding.