Unlocking Portfolio Equity - Looking for Input!

10 Replies

Hello BP!

I'm looking for the best way to access capital to get some BRRRRs going. My first thought is to unlock the equity in the current portfolio (~$250k over 10 or so properties) through a portfolio loan, but then I would lose the great rates and terms of the current loans. Is there a better way to gain capital to work with? Is there a line of credit for this kind of situation? 

Thanks for your input!

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Do you have one particular property with a great LTV? Get a HELOC on that one property.

Thanks Joe, I'll reach out!

@Peter T. , most of our properties are leveraged around 50-60% ARV, so unfortunately a HELOC on a single property doesn't gain what I'd like to access. It's starting to look more like a line of credit is what we're going to pursue.

Originally posted by @Clay Winder :

Thanks Joe, I'll reach out!

@Peter T., most of our properties are leveraged around 50-60% ARV, so unfortunately a HELOC on a single property doesn't gain what I'd like to access. It's starting to look more like a line of credit is what we're going to pursue.

How would you do that? Refi it all into a portfolio loan and get a LOC on the difference in LTV? Another option could be to refi a handful into commercial and cash out refi...

Have you thought of asking someone with a self-directed IRA to lend you funds at an attractive interest rate secured by a second mortgage on the properties. You needn't always go to an institutional lender.

Peter, we're looking at both secured or unsecured lines right now.

@Rick Stein , that's a great option and one we've discussed. We just need to find the right person with a sizeable IRA and willing to work with us!

Do you belong to your local REIA. That's a great place to start

@Clay Winder I think you are looking at this in the wrong light. Their is an opportunity cost of money that is costing you monthly by leaving the cash sitting in equity not earning a return. Lets say you can pull out 250k and buy 1mil worth of leveraged real estate which returns you 12% a year. So without selling the portfolio you already have you can re-leverage it and go out and buy 1mil worth of income producing assets that return you 12% a year AND debt pay down monthly which your residents pay, it does not come out of your pocket.

Your returns on your original portfolio would actually go up yes you will have a higher interest rate on the new loan but if the rate on the new loan is 5.5% and you can go out and earn 12% then you should do it.

I would also take into consideration can you find deals in todays market environment? if you cannot then I would get half as a cash out refi and half as a secured LOC so that you are not paying higher interest on unused funds.

A great podcast for you to listen to is Get Rich Education with Keith Weinhold start from episode #1 you will learn alot about return on equity.

I agree with Eddie. You should have no problem rolling it into a portfolio with an LOC and/or cashing out. Keep that money working!

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