All Forum Posts by: Kerry Baird

You laid the problem out nicely.  You have a great plan for the future, so don’t let this re-rail your plans.  Things happen with houses, and sorry to say, the world runs them down and they need to be refreshed every so often. 

Path—-> Pull your own credit at MyFICO so you have a starting point. Call all the community banks and credit unions in your area, and ask what their parameters are for HELOCs using your FICO range that you pulled. Don't let them pull your credit at each place, which will hurt your score. That one lender you connected with does not operate as all others; yes it is multifamily but yes it is also owner occupied. I expect you can find a HELOC provider at a local credit union. TIP: if you see signs out front offering CDs, they want money IN before they lend money OUT. If the sign out front offers loans or HELOCs, that's one you call. Navy Federal, as an example, needs a long time to close and requires tax returns, but has a 20 year draw and a 20 year payback period…takes much longer than others, but that payback period is amazing. Figure can close on HELOCs quickly.

Other than that, you might look at personal loans, which are probably higher than a HELOC but lower than credit cards.

Last idea, perhaps you find a roofer that has in-house financing. 

I like a blend of some ideas above.  Order of Operations:

-If you plan on getting a HELOC, get one while you are an owner occupant. I like HELOCs for emergency funds.

-Save, pay off debt, clean up credit and get a war chest so you are able to move forward once you’ve saved up.  

-Then house hack, turning current house into a rental and getting as many doors as you can on the new property.  Plan on living there between 1-2 yrs while making improvements, and renting out other parts of the house if possible.  2 years for tax benefits, 1 year for lender obligation before you move on to another purchase.

-Do that again, save up, buy a 4 plex and move in, rent out other doors, stay 2 yrs for capital gains tax purposes. 

-At the 5 yr point, sell the first property and buy two houses or another 4 plex, with the proceeds. Do that again at yr 6. 

@Pierre Eade, I also use TD Bank and part of the reason I selected that bank was the fact they do offer HELOCs on investment properties.  I have also discovered that Quorum FCU and Figure both do HELOCs on investment properties.  My profile has a long list of lenders that do HELOCs on investment properties in different parts of the country…and I’m not selling anything.

You obviously hit a ceiling, which is why I went over to DSCR lenders. That enabled me to continue growing my portfolio. I have used 4 different DSCR lenders, one of which I would not recommend. These are Visio, LendingOne, @Timothy Hero as broker for a portfolio loan on 8 properties (if I remember the number of houses correctly) followed by a STR purchase, and I used Sortis for short term bridge financing on a property that was hit by hail while under the contract period so we had to switch to a different product until we fixed it up. I started the process with Mofin, but my situation changed and I did not complete.

Personal loan rates are often lower that those HELOC rates. What about a business line of credit? Also would be high rates, but on the business side of things rather than personal.

There are a lot of people here who would love to do what you did.  Nice!

@Joe Villeneuve

@Joe Villeneuve, If I could vote a dozen times for this post, I would.  Joe’s comment is how we grew our portfolio, and how we plan on “going wider” in the future.  We will be selling one high equity house with low cash flow, and transitioning into high cash flow houses in an area where we already own houses.  This one sale will enable us to buy 5 additional cash flowing houses, and expanding our cash flow.  The tenants will pay those down, and we will do it again.  

@Tianyi Chen, my husband has a W-2 job and I raise our kids and manage the portfolio.  I like to source, buy, renovate and rent or sell.  My bio has all of our deals, many of which were sub2 or other seller financing.

@Tianyi Chen, the HELOC you mention will be much easier and cheaper if it is on your primary residence. I really like Navy Federal, as it offers a long draw period and a long repayment period.

I got tired of jumping through the hoops for conventional mortgages, specifically with the large amount of reserves required with those mortgages.  By the time I had six months saved up, I’d rather use that for a down payment than to keep as perpetual reserves.  Yes, I keep an emergency fund, however the reserve requirements went through the roof a few years ago.  So, I buy with seller financing when I can and remodel.  Then I look to refinance later.  

I have used a number of DSCR lenders. I started with Mofin (and chose to sell the house instead of refinance), have completed financing with LendingOne, my STRs were financed with RCN brokered with @Timothy Hero, and LTR with Visio.  

Any questions? 

I am personally happy that I set up LLCs. One owns the properties in TX and the other LLC owns the properties in FL, and the third is the management company that manages the LLCs.

I have business checking accounts for each entity, and business Amex and Chase Ink cards, which keep this all a closed system. The credit usage no longer goes on my personal credit cards, and so my personal credit isn't affected by the business. Very helpful for DTI qualifications. This can be done, the business credit aspect, without entities.

I buy or refinance the properties with DSCR mortgages, which do need to have ownership of properties in an entity. I submit the Operating Agreement and EIN number, and formation docs to the lender when I get those loans.

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