All Forum Posts by: Kerry Baird

I have been happy to use DSCR mortgages in a similar situation. They are also how you do financing in an LLC. However, maybe First Midwest is still doing HELOCs on rental houses. Give them a call. Navy Federal CU, Figure, Signature FCU, Quorum FCU, US Bank have done them on rentals in the past.

@Taylor Hughs, You have a scant blueprint, but the start of one.  Each of us will be different.

That said, this is what we did: 10 single family brick houses in a linear market in Texas. 5 medium sized houses in an expensive beach market in Florida. 1 super STR in an expensive beach market. The rents of the smaller houses support the big house.

We have steady income from the 10 SFRs and seasonal income plus appreciation (and great depreciation) from the STRs.

Your number 2 above: Buy as an owner occupant, and rent out rooms.  Do not refinance until you really have built up equity, probably 5 years.

Instead, during that first year you are going to paint and spruce the place up.  Harden things that might be damaged by tenants (no carpet in Dallas...you will replace it every 4 to 6 years, so do LVP).  Save up the down payment for the next duplex, but it as an owner occupied house, and turn the first into a pure rental.  Do that again, and again, leaving rented duplex units behind you. 

By year 6 you may have 5 duplex units.  Refinance unit 1 and buy one more (or two, if you have had a lot of appreciation) with this money.  Buy another with your savings.  Year 7, refinance the second house and buy one, but probably 2 more.  Year 8, buy one more with savings and refinance the 3rd house and buy two more. 

You are done by year 10. Buy the house you really want to live in, and you will already have your Porsche.  

I have been better off by buying the early houses in our own names, with nice conventional mortgages. By the time conventional mortgages are very difficult, then it is a good time to start looking at DSCR mortgages and using an LLC.

Nice job!  Smells would chase off so many people, so fixing the smoke was a great start.  Sounds like you did a nice rehab. 

That is not easy, comparatively.  Need the down payment, need income source, need qualifying FICO, need tax returns.  You ostensibly can buy with seller financing and have *none* of that needed for owner financing. 

.

@KC Pake made an excellent set of options.  Nicely done.

I have found tired landlords who have paid off their properties; I found them by riding my bike in my neighborhood and striking up a conversation.  They want a lump sum for a part of their equity, and also to get monthly payments.  I pay 6% interest only on my mortgages to them, for a 5 year period of time. 

The other side of this is what THEY want and get.  They don't pay taxes on the part of the sale they don't receive.  They get their money over time and therefore pay taxes on the gain over time.  

You have gotten a HELOC approved for properties held in an LLC? Or on your primary and you use with your LLC? I think you might already have a system in place that works.

Relay is a banking solution that enables easy account creation and transfers.  I understand that PNC has something similar.  

I get my payments from Apartments.com.  I use Stessa for the software accounting, with dashboard to see the income, expenses, assets and liabilities.  

I have used Zillow to screen tenants, but you could pay a PM to just do this part and then manage the property yourself.  

What if you could draw your down payment from the HELOC and use all the cash flows (rents) to pay it off asap. Use the HELOC for emergencies. Draw again when you find your next property, and repeat. Navy Federal has a very long draw period, 20 years and 20 year repayment period.

Other options: buy from tired landlords and see if you can get owner finance. You could do marketing to owners of small apartments, the ones that are difficult to finance 5 units on up, and see if they'd be willing to carry back a note for you. You could go with DSCR mortgages (I recommend Timothy Hero) which are based upon the cash flow that properties produce.

Last idea: get business credit with your EIN number, and keep credit off of your personal side of things.  Use the cash flow to pay off your personal credit.  Then go to Chase Ink and American Express Business Blue.  Avoid CapitalOne, which shows up on your personal credit.  

This is an excellent post…sometimes the finances don’t come through as we expect.  Or the order of financing could be arranged differently.  Or an appraisal doesn’t come in where we expect.  

Fulton Bank, HSBC, Trustco Bank, Navy Federal CU.