Rental Property Investor · TX · Member since 2019 · 32 posts · 26 votes
I have hit a brick wall in my real estate investment business. I have maxed out on rentals I can finance. I currently have 11 rentals. One is fully paid off and I just moved into a new primary house with my family. I have been buying at least one house per year for the last 6 years. I have a little over a million dollars in equity in my 11 rentals. I don't know how to leverage that equity without refinancing each house and I don't want to do that. I refinanced most of the houses last year with low interest rates. I want to wait at least 5 years before messing with the current financing so I can break even on the cost of refinancing. -
I am interested in getting into multi-family houses or apartments using a portion of my current equity. I have called many banks and no one will give me a blanket loan with my rentals as collaterals or a line of credit for the million dollars I have in equity across my 11 properties. Most commercial banks wouldn't mess with residential properties and the personal bank side wouldn't allow me to combine the equities of all my rentals. Most are offering cash-out refinancing of all the properties individually which I don't want to do
@Emmanuel N Okafor congratulations on the success you have had thus far in your journey! As you look to make the jump to commercial, it will be a mind set shift for sure. The interest rates and terms are going to look less attractive in the sub 1 million dollar loan space.
If I were in your shoes, I would think about flipping one or two of your less desirable homes to capture the equity. I know there is a lot of focus on using those "golden ticket" conventional loans, but once you jump into multi units it is just so much more scalable. Also, the financing on larger multifamily buildings is actually more attractive in a lot of ways than single family homes right now.
@Emmanuel N Okafor congratulations on the success you have had thus far in your journey! As you look to make the jump to commercial, it will be a mind set shift for sure. The interest rates and terms are going to look less attractive in the sub 1 million dollar loan space.
If I were in your shoes, I would think about flipping one or two of your less desirable homes to capture the equity. I know there is a lot of focus on using those "golden ticket" conventional loans, but once you jump into multi units it is just so much more scalable. Also, the financing on larger multifamily buildings is actually more attractive in a lot of ways than single family homes right now.
Thanks for the suggestion John. I have considered selling my less desirable properties but that wouldn't raise enough capital to do what I want to do. Most of my equity are in my very desirable properties. The other alternative plan I have considered is finding a portfolio lender that will allow me to continue buying single family rentals at decent interest rates. My cash flow is currently $75K, if I could get it to six figures I may be able to enter the commercial space sooner using my cash flow. I haven't had success finding a portfolio lender.
@Emmanuel N Okafor I agree that portfolio lenders sound like your next move. Really, a portfolio loan is the same thing as a commercial loan at the end of the day. Its a loan that a lender is keeping on their books, so the terms tend to be a bit more conservative. It looks like you are in Texas, so I am sure you will have a lot of options. Here in Chicago, I called a dozen banks or so until I found a small local bank here in Forest Park that has done a great job for me. I don't always get the absolute best rate and terms, but they get the deals done (which is ultimately more important).