Growing a Rental Portfolio

6 Replies

Hi Everyone! My name is Rik, I'm an agent/beginner investor here in the South Florida region. I've watched a ton of BP vids like growing from 2 units to 100 etc etc. I noticed one topic doesn't get covered. To grow with more and more units, how are people financing it? Isn't refinancing risky and isn't it considered as over leveraging?

I have 2 rental townhouses but I want more. What mindset should I have in terms of financing and to grow to more units? Do I keep leveraging? Is the snowball effect good to be safer?

Looking forward to hearing from everyone!

Hi @Rik Patel   Over-leveraging is a dangerous move, so I wouldn't suggest it. The more leverage you take on, the lower your cash flow will be as well. After a certain point (conventional loans), you have to get creative. Network with portfolio lenders, or seek alternative financing methods.

The snowball effect can help you with getting down payments together as well. 

Dan, I guess my follow-up would be at what amount of units do you think is the appropriate time to work with a portfolio lender?

Dennis, I've read a lot about the BRRR strategy but it involves refinancing which is holding me back because doesn't that lead to over-leveraging?

Originally posted by @Rik Patel :

Dan, I guess my follow-up would be at what amount of units do you think is the appropriate time to work with a portfolio lender?

Dennis, I've read a lot about the BRRR strategy but it involves refinancing which is holding me back because doesn't that lead to over-leveraging?

2 things I'd mention

1) I've always thought of this strategy as the initial purchase happening with cash or hard money.  Therefore the refinance is just putting debt on the same property, not overleveraging based on an appreciating market.

2) You can get up to 10 FNMA/FHLC loans, but 5-6 is probably a good idea to start networking.