Go-To Financing Strategy for Growing Your Portfolio?

[Isaiah Hall]

Curious to hear from other investors, what’s been your most effective strategy for funding deals and scaling your portfolio?

What’s worked best for you and why? I’m always looking to learn from those a few steps ahead and would love to hear what’s been game-changing in your journey.

Feel free to drop your go-to method and any lessons learned!

[Mike Klarman]

If you want to maximize your spread and make sure at the refi stage you not only get your money back, but you can take a little extra, you have to get in for cash in the off-beat procurement strategies.  You're buying at auction, you're buying foreclosure, short-sale, direct from seller.  In the midwest you can buy for 30k - 50k.  Cash.  a 3/1 house that's worth sometimes 200% of what you paid for it.  I bought a house at auction last month for 39,500.  It's a 3/1 house in a c/c+ neighborhood.  I have four possible options for exit:

1) I sell this to an investor as-is for 60k - 65k.  My agent said we get that easy.

2) I do a rental finish inside for like 40k, and I list it for 135k - 145k for an investor to pick up as a cash flowing asset.

3) I do a complete flip and make it as nice as possible, probably 80k. But I'm capped on ARV b/c of the area, so not going that route. But if I was, I can go to a lender and get into a delayed bridge and get the rehab money and some cash back from the purchase

4) I can go to the lender and get the bridge loan, but do a nice rental finish.  Maybe 60k worth.  I'd have a loan amount around 75k/80k.  Then a refinance out at like 140k.  I can get 75% of that.  105k in a refi.  I payoff the loan and recoup 25k back.  I'm leaving 15k in but now I have a rental with a loan payment at around 1k per month and the rent is easy 1750.

If you constantly buy on market using financing from the start, you will consistently overpay and that will mess up all the numbers from the start.