Financing Woes

7 Replies

I would LOVE to hear about how you've all come about obtaining the financing needed to reach, or attempt to reach your real estate goals. 

My husband and I currently own 3 properties, all of which were purchased within 2 1/2 years of each other, but....we seem to be at the end of the rope. One home equity line and installment loan later....doesn't seem like we've got anywhere else to go. We're making hefty payments on these loans (especially the LOC since it's revolving) and are staying on top of the interest charges and paying everything down ahead of schedule, and as of now these properties are keeping us very financially comfortable, buuuut...we want more. We *need* more to reach our financial goals.

How is everyone else approaching their investment property ordeals? I absolutely hate the though of selling what we have.

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Ask other investors in your town.  We have several lenders here where you can get up to 10 conventional loans.  You'll usually get a better rate with a conventional loan vs. a portfolio loan. 

Also - if you can qualify without both of you on the loans, then you can each do up to 10 loans (or 4) depending on the lender.  That should get you a good distance further.

You can finance up to 10 purchases with a good bank or portfolio lender who understands investment property and landlord issues.

Since you've had your properties for over two years you'll get credit for all the rents you claim on your taxes and get back many of your deductions on the expenses of the properties as well. Find a good banker/broker and you'll be in good shape.

Ask your attorney or older landlords to finance your projects. My attorney borrows $$ firm at 3% and charges us 8%. Great arrangement for us but took many years of relationship development to get here. Doesnt hurt to offer you as an opportunity.

@Sarah Grise Since you posted this in the creative finance forum I would imagine you're interested in trying something other than conventional loans (although the advice you've already received is excellent).

For me it's all about owner financing. Besides your imagination, the only limit with owner financing is your ability to find motivated sellers and negotiate deals with them. Your credit, debt ratio, and track record are rarely--if ever--an issue.

Thank you all so much for the wonderful ideas! And yes @Doug Pretorius, we are open to any and every type of financing at this point in order to get to our goal. Are you referring to "for sale by owner" type deals?

Originally posted by @Sarah Grise :

Thank you all so much for the wonderful ideas! And yes @Doug Pretorius, we are open to any and every type of financing at this point in order to get to our goal. Are you referring to "for sale by owner" type deals?

While a FSBO seller might be open to seller financing, in general they tend to be above market in terms of pricing. What may make a "low-ball" offer interesting is demonstrating the payments for 5 years vs. getting close to asking price, but having the proceeds sitting in a bank account earning 1% or less. To make seller financing clean, you will need a property where there is no existing mortgage or your down payment will cover it.

One target for sellers interested in seller financing might be properties that are sitting on the rental market.  The seller might be very receptive to turning an income drain into an income stream even if they lose appreciation potential.  One caveat is to make sure the rental issue is fixable - often it will be price, but if it is neighborhood or specific location - you may want to pass on even the "deal of the century".

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