Ten house limitiation
I just purchased my tenth house on Monday and all was fine and put an eleventh house on an earnest money contract on Wednesday to be closed July 31st. What I have been doing to purchase my houses is getting a short term earnest money loan from the bank, to do a cash closing at the Title Company, then turning around and getting a hard money loan, then a conventional loan. When I would get the hard money loan I would pay down on the equity loan, and when it would go conventional I would pay down on the equity loan. So far this worked for ten houses. When I got to the eleventh house I was told there was a 5 houses minimum for a portfolio loan. The terms were a 4 point documentation fee and 6.5% interest with a 5 year balloon or 7% with a 10 year balloon. Currently I am paying 4.5% to 4.85% on a 30 year loan on the 9 houses and it will be the same on the tenth house. My net is $600-$800 per house. The equity loan is only good for 3 years then needs to be paid off in full. It's a 3.5% interest only equity loan. I borrowed $118,000 from the equity loan on my last purchase so the interest is $344 per month. What am I supposed to do after the tenth house? My business partner has a master in finance and will no allow me to roll 5 houses into a portfolio loan because of the unfavorable terms. I was told to figure it out and was told that we would spend all the profit paying down the eleventh house if necessary. My question is how do I buy more houses with these terms? The equity loan is not enough to buy 5 houses at a time even if I got the houses at a deep discount.