I own two investment properties (each with two units) in Jersey City, both on a personal loan on my name.
How can I start buying more properties and grow my portfolio , offcourse just on my income I cannot get loans on 10 properties not even if I include my wife's income.
Hard Money Lenders are good for flips and will be very expensive.
Do I have to look for portfolio lenders in NJ, How much is the approximate interest rate that they charge.
Hi @Kunal Mishra !
Is the challenge the capital required for a down payment, or your debt to equity has gotten too high for an additional mortgage?
If the problem is cash for a down payment the SIMPLEST solution I would recommend would be using an FHA or VA loan if applicable because they both have high LTV helping you to better leverage your deals. (Even if not a Veteran, FHA loans are very easy to get you just need to intend to inhabit the property at the time of purchase).
If you have equity in your properties and no seasoning issues(having recently acquired a different mortgage) you may be able to use them as collateral for an additional loan.
Hi @Joshua Den
No, the down payment is not an issue, also I don't think we can have more than one FHA loan at the same time.
I just want to know tell other means of financing so that I can grow my portfolio.
You can't have more than one fha loan at the same time. Maybe try networking and find someone who wants to joint venture. It will be easier to get a mortgage if you consign. Also, you can use your rental properties as income .
Hi Kunal, do you have equity in your properties that you can pull out?
@Matthew McAlarney Yes I do declare my rental income on the returns so I can do that.
@Edward Verdel I should be having some EQ, do you mean doing a cash-out-refinance and using that for down on other property. the issue is wont the bank at some point stop me from taking more loans when my Debt to Income ratio keeps going higher.
Any portfolio Lenders in NJ that can help for long-Term Investment
@Kunal Mishra Traditional mortgages like you've started with can get you through the first 4 properties -- if you keep your Debt-to-Income ratios good, credit score up, etc. After that, you'll find commercial loans start making more sense if they didn't before. Contrary as the name seems, you can use a commercial loan for ANY property where it makes sense, including single family, duplexes, etc.
Once you start doing loans on the commercial side, you'll find that property performance is far more critical than your personal debt ratio. And most importantly, there is NO property limit on the commercial side. One of our local investors has over 85 mortgages on single family homes.
Expect to need about 25% equity (it varies based on details) to do a commercial loan for a property.
@Darrin Carey Thanks for the advise, but going for a commercial loan means I need to have a good turnover on my LLC company or the only downside which I am guessing is the extra points on the interest rate?
Will nobody care about the debt to income ratio at all for the commercial loan?
Each properties performance is what matters most. Debt-to-Income is a smaller concern unless you have negative cashflow. It's looked at, but there are no "rules" to follow. For example, we just closed a rental loan for a local investor whose Debt-to-Income was around 75%.
Rental loan rates are currently ranging from 5-7% or more, depending on the deal specifics, and the level of documentation the borrow is willing to do. Points and fees vary a lot; they can be up to 5 or 6% of the loan amount or a little as 1%. That cost is very specific to the deal.
Your LLC needs to be in place, but that is all. When you get a lot more properties it will matter more.
@Darrin Carey You are the best, thanks for the insight.
You're welcome! Here's to profitable investing!
@Kunal Mishra Hello. When you are doing your due diligence for your next purchase. What information do you request from the seller of an apartment building? If they have not been filing taxes for the property during their ownership is that a deal killer for you?
Also what is appropriate to ask for once an offer to purchase as been executed by both parties? expenses, monthly rental deposits into a bank account,
In your offer to purchase would you use language such as " Offer subject to review of owner's financial statements regarding said property"?