How to keep scaling my real estate holdings
I own 4 rental units (3 condos and a multi-family). I have 25-35% equity in all of these properties. How can I best use this equity to keep scaling my portfolio?
It seems banks aren't really doing HELOCS on investment properties right now.
I have looked into securing lines of credit through resources like
https://www.corevestfinance.com/learn/ but am a bit skeptical as well.
Anyone have any advice on strategies I could execute to keep acquiring more properties?
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
- 5,506
- Votes |
- 9,861
- Posts
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
I know a lender doing lines of credit on equity, has to be a 5 property minimum though
Shoot me a PM if you want to get a second opinion on HELOC offerings.
To keep scaling you could sell and reinvest into something bigger. Using a 1031 exchange would be a good option to explore if you do want to go that route.
#1 1031 Exchanges Contributor
- Qualified Intermediary for 1031 Exchanges
- St. Petersburg, FL
- 8,891
- Votes |
- 8,575
- Posts
#1 1031 Exchanges Contributor
- Qualified Intermediary for 1031 Exchanges
- St. Petersburg, FL
@Kevin Bulger, Scaling doesn't have to be bigger. It could be more of the demographic you're comfortable in. A 1031 could let you accomplish both.
1. Sell a couple of properties with the most equity and least cash flow.
2. Do a 1031 exchange and buy two or more replacements. But since you can allocate your proceeds anyway you want, you will use cash to buy one. And use maximum leverage to buy the other one.
3. At the end of the 1031 you still have as many properties. But they are hopefully better producing properties. And one of them is free and clear. So you can do a cash out refinance (instead of a heloc) and pull cash out to purchase another property.
The really nice thing about this strategy is that you control the pace. If you don't like the interest or supply market you simply wait until it is time to buy your next one. Meanwhile you have a property that is out of any lending risks.
Quote from @Kevin Bulger:
I own 4 rental units (3 condos and a multi-family). I have 25-35% equity in all of these properties. How can I best use this equity to keep scaling my portfolio?
It seems banks aren't really doing HELOCS on investment properties right now.
I have looked into securing lines of credit through resources like
https://www.corevestfinance.com/learn/ but am a bit skeptical as well.
Anyone have any advice on strategies I could execute to keep acquiring more properties?
I would fine ways to create capital quickly through flips or wholesaling. I wouldn't pull anymore equity or refi since you are at the correct ratio for stabilizing a property. If you were to move money out, you could potentially limit cash flow and not have enough cushion in your holdings.
I would advise completing a 1031 exchange. They are more simple than you think and allow you to tap the ful potential of your equity you have. I have a return on equity calculator that I can show you that will help you decide if a 1031 exchange is right for you. Just dm me.
-
Real Estate Agent Kansas (#00245860) and Missouri (#2019043249)
- http://www.xchangecre.com
Hi Kevin,
Another option that can also work is to get unsecured funding that can be used to fund real estate down payments or outright purchases. It's out there and available from lenders who don't have as strict criteria as conventional banks.
Be happy to connect.
Best,
Dave
Quote from @Eliott Elias:
I know a lender doing lines of credit on equity, has to be a 5 property minimum though
Hey Eliott, what would this product look like with 5 properties? LTV of the 5 properties, terms? Do the properties have to be in specific states/areas?
Thank you for your time!
Can always look into cash out refinances to pull the equity out of your home
I've heard of a lot of people having success with the BRRRR method to scale
You can do a HELOC on a primary residence if you have one.
I'm not sure you have enough equity to do a cash out refi or a 1031. You would have to run the numbers.
I would also consider raising capital via a jr partner or form you own syndication. Sometimes the strategy is to hold onto the equity you have until it can grow further.
1031 exchange could be an option if you are not opposed to acquiring new properties