Question/Advise: financing/funding options

4 Replies

Hi,

I'm still relatively new to REI. I looking for some advise/opinions on financing/funding for my next deal. I'm looking to grow my portfolio.

Some base info:

1) I own 3 SFH in the midwest. (~$45k-$50k each)

2) I’m an out of state investor. (located in California)

3) The 3 properties paid for…no loans on them.

Questions:

1) What’s the best way to pull or leverage the equity from my 3 units? local bank?

2) If local bank…would it be in California or in the same area where my properties are located?

3) Is it possible to set it up as a line of credit vs. a conventional loan? Or should I ReFi them?

4) If ReFi…would I do it one at a time or is it possible to package them up?

5) Or should I take out a conventional loan and just let the cash flow from the 3 units pay off the loan? Can I qualify for a Fannie Mae for investment properties?

Thanks in advance for any advise.

Donnie

@Donnie N. - how long have you owned the 3 properties? Some lenders have seasoning requirements which range from 6 months to a year before you can do a full cash-out. 

Usually local/community banks like to work in markets they know. There are nationwide lenders. 

As for LOC v. Loan: it's your preference and needs. A lot of people who need access to cash to close fast on deals go with loc. Others who like to do more buy & holds go with conventional. And, you can get a few properties under one loan, it depends on the lender.

Thanks @George Despotopoulos !

1 of them I had for over 1 yr. The 2nd one for about 5months. The 3rd is brand new. That's what I thought, that I would need to season them for a bit first. I'll start researching for the local/community banks. Any nationwide lender that you would recommend?

I'm leaning toward the LOC for now to speed up the acquisition/deal process. But a conventional would also work, it'll all depend on what I can get.

Hello Donnie,

My first questions is how quickly do you plan growing? How many properties would you like to acquire over a 12 month period. There is a strategy involve here that I used to grow a large portfolio of SFRs in a short period of time. Happy to share.

@Bob Green Thanks Bob!

How quickly...that's relative. My original goal was to acquire 2-3 SFH/yr for the first 2-3 years. (I'm about ~1.5 yr in to this venture) Then move in multi-units. However, now I'm starting to rethink that plan. I'm starting to think that maybe start moving in to a multi-unit sooner. The SFH was a good start but the multi-units stills to be more attractive for a few other reasons. (e.g. easier to rent out, etc.)

Love to hear about how what route you took to scale up and at what pace. Happy to give you a ring later this week or weekend to dive deeper if it's easier to talk over the phone. 

Thanks again Bob! Looking forward to hearing your advice. 

Donnie

Join the Largest Real Estate Investing Community

Basic membership is free, forever.