Looking for advice on my next move

Member since 2024 · 2 posts · 0 votes

I have 3 properties that total about 800k in equity with no mortgages. If I would like to expand my portfolio by 1-2 single family homes in the 170k-200k range with less than 50k of my own money, what would you do? Thank you!

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Denise SuppleeBusiness Member

Realtor · Willow Grove, PA · Member since 2017 · 998 posts · 647 votes

2mo

Congratulations! Having three properties that are free and clear puts you in a wonderful position and gives you a lot of flexibility. From my experience, I don't think there's one right answer. It really depends on your goals and how comfortable you are taking on debt again. Just because you have the equity available doesn't necessarily mean you need to use all of it. I'd sit down with a trusted lender and look at the different ways to access that equity, then compare the costs and decide what makes the most sense for your long-term plans. I'd also make sure any new property still cash flows well with today's numbers. I'd rather add one or two solid rentals that I can comfortably hold than grow faster and take on more than I'm comfortable with.You've already accomplished something many investors are working toward. I'd take your time, look at all your options, and choose the path that best fits your goals.

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Kerry Noble JrPro Member
Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
2mo
I personally would take about 200K of the equity and put it into a 4 unit here in the midwest.....
leave a good chunk of equity in the properties just for safe keeping in this current economy.
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Pete Pulkrabek
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Member since 2024 · 2 posts · 0 votes
2mo
I like this idea. Thanks!
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Denise SuppleeBusiness Member
Realtor · Willow Grove, PA · Member since 2017 · 998 posts · 647 votes
2mo
Congratulations! Having three properties that are free and clear puts you in a wonderful position and gives you a lot of flexibility. From my experience, I don't think there's one right answer. It really depends on your goals and how comfortable you are taking on debt again. Just because you have the equity available doesn't necessarily mean you need to use all of it. I'd sit down with a trusted lender and look at the different ways to access that equity, then compare the costs and decide what makes the most sense for your long-term plans. I'd also make sure any new property still cash flows well with today's numbers. I'd rather add one or two solid rentals that I can comfortably hold than grow faster and take on more than I'm comfortable with.You've already accomplished something many investors are working toward. I'd take your time, look at all your options, and choose the path that best fits your goals.

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Evan HoppleBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 285 posts · 420 votes
2mo
Quote from @Pete Pulkrabek:

I have 3 properties that total about 800k in equity with no mortgages. If I would like to expand my portfolio by 1-2 single family homes in the 170k-200k range with less than 50k of my own money, what would you do? Thank you!

Long-term 100% financing generally isn't going to make much sense. Instead, I'd look for distressed properties you can buy at a discount, use your equity to purchase and renovate them, and then refinance into a long-term loan once the work is complete. That allows you to pay off the HELOC while ending up with a stabilized, turnkey rental.
This strategy has worked particularly well in my Midwest market, where it's still possible to find properties with enough upside to make the BRRRR model work. If you buy right and can recycle most of your capital through the refinance, you'll be able to acquire more than just two homes over time.

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Jeffrey Abraham
Lender · United States · Member since 2020 · 177 posts · 28 votes
2mo
Hi,

Based on what you've shared, you're in a very strong position. Having approximately $800,000 in equity across three properties that are free and clear gives you several financing options, and you may not need to leverage all three properties to achieve your goal.

Here's how I would approach it:
1. Cash-Out Refinance on One Property – Rather than encumbering all three properties, we could potentially do a cash-out refinance on just one property and pull enough equity to purchase one or two additional homes while still keeping the other properties debt-free.
2. HELOC (Home Equity Line of Credit) – A HELOC is another excellent option. It allows you to access your equity only as needed, and you pay interest only on the amount you use. This can be an efficient way to fund down payments or even purchase investment properties, depending on the lender's guidelines.
3. Gap Funding or Bridge Financing – If your goal is to keep your cash investment under $50,000, gap funding or short-term bridge financing may cover the difference between your available cash and the purchase price until you refinance or stabilize the new properties.
4. DSCR Investment Loan – Once you've secured the down payment from your equity, a DSCR (Debt Service Coverage Ratio) loan can finance the new rental properties based primarily on the property's rental income rather than your personal income.
With your equity position, I believe there's a good chance we can structure the financing so you acquire one or even two homes in the $170,000–$200,000 range while investing less than $50,000 out of pocket.

I'd be happy to review your properties, estimate the available equity on each one, and determine which financing strategy provides the lowest cost and the greatest flexibility. In many cases, using just one property as collateral is enough, allowing you to preserve the equity in your remaining properties for future investments.

I look forward to helping you grow your real estate portfolio!
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Ismael El Hamdouchi
Member since 2025 · 68 posts · 28 votes
2mo
One thing I’d think about is whether your current properties are already your best source of capital. Before buying another property, I’d compare the expected return from refinancing or adding value to what you already own versus deploying new debt into another acquisition. Sometimes optimizing an existing portfolio creates a better risk-adjusted return than simply increasing the unit count.
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