I currently acquired 10 properties in 2017 by establishing title under my LLC using the BRRR business model with success. However, I have reached my lending max. with my local banker who was lending me 80 LTV on mult houses combined in the refi process. I reached out to another local bank and was told my entity was a risk factor because of 10 properties acquired so quickly and the cash out refinanced option used in less than year. I am seeking guidance on how I can continue until 2018 with the same business model? My goal is to continue using the the commercial refinance cash out option to pull equity and grow my business. Appreciate the input!
Wow, that’s awesome! Congrats on the growth over the past year. I’m hoping to do something similar next year.
Hate to state the obvious, but it seems the big bottleneck is lending on the refi. I would network with other investors in your area (meet ups, etc.) and ask everyone and their mother who they use for long term financing. Or just use the brute force method...google all the credit unions and community banks and just start calling people.
Here’s another thought: what if you did a blanket loan on your existing properties to pay off your current 10 loans? Then that would theoretically “reset” your loans down to zero and you could start back up with your current lender.
Kyle M. thanks for the insights appreciate!!!
You can look into portfolio lenders. These lenders can consolidate your mortgages under one umbrella mortgage to allow for greater flexibility and decrease in administrative costs. Alternatively, you can choose to direct all your cash flows to the highest interest rate debt (assuming you've done the analysis on pre-payment penalties and other fees associated with accelerated payments). This can reduce your interest component and allow you to use your scale to your advantage.
Another idea, would be to work with private money lenders to help you acquire more units. Depending on your relationship and market, this can, often, involve higher interest rates but on less onerous terms. As per my knowledge, your 10 properties will not be an issue.
You can also bring in partners - active and passive. With your market knowledge, a passive investor can provide the capital while you provide the managerial ability. You can split the profits. Partners can also bring in expertise in areas where you lack or introduce you to their network to further grow you pool of capital. Networking in your local real estate groups can help you connect with such individuals.
Appreciate your insight will consider all options that you outlined.
@Chris Davis congrats on the acquisitions. I strongly encourage you to look into working with private money lenders. Until I really started making it part of my business model, to reach out to and connect with people who have funds available to lend, I was getting discouraged. Last week I secured two new private money lenders over coffee. Merry Christmas!
Mario Mormile wow that is great to hear!! I will look into private money lenders do you have any recommendations in OH?
I’ve noticed that if bankers can’t do a something they may act like it’s just not possible, like no other bank will do it. Don’t get discouraged by this!
You can also get completely different answers from the same bank depending on who picks up the phone.
Call every bank under 1 billion in assets in your area. If they all say no, call them again. You might get a better answer lol.