What would you do? Financing hurdle after 2 properties

[Cole Shawd]

Looking for advice. I just completed my second rehab rental on a single family home. Both are now rented and currently have $35k equity in each one ($70k total) after the rehabs. Unless I throw a flip in here and there continuing to purchase properties with conventional 20% money down can be difficult as we all know. For now I'm looking to avoid private money and looking to BRRRR one of them to get my third. I've been stuck though in my mind not wanting to leverage other properties on top of one another so if and when the market turns I still have solid equity in each property. It is more of not doing it before and new to that process so the fear from that holds me back. To provide more numbers my 3rd property would be a purchase around $70k-80k and $20k rehab max for around $90,000-$100,000 all in property. Appreciate any suggestions and support. Thank you

[Caleb Heimsoth]

@Cole shared. I don’t really understand what you’re trying to do. You have 2 loans and want another but don’t want to do conventional because it’s a pain or what exactly ? You’re allowed 10 conventional mortgages so you’re not limited in that regard.

If you don’t want to do private money your next best option is a local (to wherever you’re buying) bank that will do portfolio loans

[Andrew Postell]

@Cole Shawd based on your description it sounds like you are buying properties at full value with conventional financing? If that's the case, then yes, you will run out of money with that technique. That's the whole point to BRRRR - to limit your out of pocket expenses.

And you SHOULD NOT under ANY circumstances purchase properties at 100% ARV. If you buy a property that needs rehab and have no equity in it....then why not just buy a property off the MLS and save yourself all the work of rehabbing it? But even buying a property at fair market value means you are actually paying OVER market value because of closing costs.

You should 100%, without a doubt be looking into different strategies here...or else you will run out of money. Most successful investors who use the "buy and hold" techinique will purchase properties that are off market and they usually buy AT MOST of 80% ARV...meaning, purchasing AND rehab included at 80% ARV.

I hope what I am describing makes sense but feel free to hit us back with any other questions.  Thanks!