Strategy for buying 12 rental properties this year

10 Replies

Our goal for 2018 is to own 12 rental properties. We are newbie investors with 1 SFH under our belt. We have $27k in an IRA that we are using to help us kick off our purchases. The price range for the homes is around $50k each. So purchasing the first 2 is pretty straight forward (20% down /conventional loans). After that we plan on tapping into a HELOC to purchase 3 more in the 2nd quarter. After this, I'm a little unsure how to purchase the remaining 5 properties as we won't have anymore cash reserves for the 20% down needed for either conventional or hard money loans. We thought seller financing could be an option, but doubtful we can get all 5 this way and we would still need money to put down. We've also learned about a company named fund and grow that can access business funding via credit cards. The money is interest free for 6-18mos. Figured we could use this for the down, but then we would need money to pay the CC back after 6-18 mos. In addition, we are going to start the year wholesaling properties to raise capital. Does anyone have advice on how to move forward? Would love some guidance!!

Nice goal, but instead of putting out that number,  try analyzing at least 10 deals a week.  Put in an offer when you find ones that meet your criteria.  

I would much rather see you get 5-8 properties that have a great cashflow, than rush into 12 units where you may not have deal you should have.  

Work on the process of finding the deal, get it nailed down start looking for the next.  You may wind up with more than 12, but no matter how many you do find it will put you in a better position if you go for the analysis.  

Thanks for the advice Ron! I have been analyzing all the properties. Love the tools here on BP. We have been listening to Clayton Morris and following his strategy for acquiring enough properties to reach our "freedom number" (enough to cover monthly expenses after fully cash flowing). This is the reason for the 12. All of the properties I have reviewed have good ROI. Just struggling on how to achieve the goal with limited cash.

Fund and Grow credit will be based on your personal credit... watch your DTI it may limit your ability’s to obtain “business credit”.

I have only done one true "BRRRR" property. But this allows you to be all in for zero dollars. In theory it works; the trick is just in finding the best deals out there. Be very selective and your cash will go further.
Best of luck!

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I think it’s a risky strategy. What if a capex or. Maintenance issue crops up. You will be squeezed cash flow wise

@Kirsten Braddock careful with taking out that business credit...I’d be sure you have a comfortable buffer, whether it be cash flow from properties or pure cash in the bank, in case paying that borrowed money back runs into roadbumps. Beware of “scraping the bottom of the barrel”...always have a margin of safety since things rarely happen in a straight line as expected.

@Kirsten Braddock Your plan sounds very risky. I would definitely want/need 6mo capex reserve for every property especially if you are getting conventional financing. That's just one of the issues I see you will run up against with this plan. @Ron Flatt is spot on with great advice. Take it one at a time and revise your goal as you go. Once you have a few conventional loans under your belt you will know exactly how your DTI is panning out and what the banks are looking for as you get multiple loans. Why 12 in 1yr? why not 2 or 3yrs?

What locale are you buying in that you can get a loan for $50K?

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