I currently own or am paying off 13 rental units. 12 are apartments and houses. 2 are vacation rentals that I am investing in with another couple. My properties cash flow fairly good but, truthfully I would like to sell my rentals (low income), keep the vacation rentals, get into flipping consistently and find a form of rentals that are less stressful for the long term.
I tried to get another mortgage and your " chase " banks tell me I am at my mortgage limit. So instead of another mortgage i have saved up enough cash to by a flip out right (I have a contract on one now) but at this rate I would be buying one 70k or under house every 1.5 years or so. I just don’t think this is aggressive enough for me.
Any suggestions on how to keep acquiring more properties with out any additional mortgages? I am not sure if I have the time for mailers, signs and door to door for seller financing deals. I know they are some of the better deals but I don’t see me going in that direction. Thanks in advance!
Once you figure out what to do for a rental area that would be less stressful, then 1031 exchange your current equity from the sale of your current units into the new rental area, no tax burden as it's exchanged into the new property (s) and you have less stress, only maybe one or two mortgages instead of more, and can continue to invest in fix and flipping properties!
GR
While I normally agree with GR’s posts, I 100% disagree with him on this one. Why risk any of your money? Why risk the equity? Why not learn creative investing where you can make the same (if not better) margins than you are now without risking your equity, credit? I’ve been doing real estate investing for years and never once have I risked a dime of my own money. My advice to you would be to find a way to learn how to lease option, wholesale, subject 2 deal, owner financing. Spend money only to market your business once you’ve learned those deals. If rentals are your thing, you can still pick up buildings by doing contract for deed deals without risking your own money. Thats the thing I never liked about investing when first getting started…the idea that banks could say “no” when you hit a certain limit because of debt-to-income ratios and stuff like that. If you invest creatively in this business, your income or credit never is a consideration and you will continue to build your portfolio.
Thanks for the replies. I hope to not sound like a lazy investor, but I am just about on the verge of giving in on the low income rentals. I bust my ass keeping them up and rented but seem to spend too much time with problems, evictions, repairs and BS.
I am thinking to Sell the low income rentals, put the money into a 1031 exchange then try for the middle income bracket 3/2 houses. In a perfect world I would have say 10 of these houses that I rehabbed and have them seller financed with 5% down or so, 7% interest you know the drill. I just don’t know how to do this without a paid off house. Paid off houses are great but i would only be able to start with 2 on this new plan.
Chunk I would like to learn more about where you are going with your reply but I am not sure what to make of it.
Vmax says: Any suggestions on how to keep acquiring more properties with out any additional mortgages?
Chunk says: What do you mean you are not sure what to make of it? Read again what I mentioned! Do creative real estate investing! No money down deals! Your credit or your money is never a question. Examples of no money down deals as I mentioned are: Owner financing, lease options, Sub2 deals, wholesale etc.
if your going to flip houses use hard money for the purchase/rehab, then pay off when you sell,
As far as less stressful rentals, I deal in the 3/2/2 in middle class neighborhoods, fix everything before leasing them, and have very few problems,just get new ac/furnace, new appliances, fix everything that needs it before your tenants move in,you can choose your tenants and there should be very few problems to deal with (and do the 1031 exchange gold river discussed)
The hard money deal seems like a good plan except for all the fees. I have owned rentals for around 5 years now and feel somewhat seasoned but this is my second flip and every dollar saved helps me out on the “fudge factor” until I became more experienced in, estimating, picking and selling the homes.
On a second note regarding the 3/2/2 houses. One of my rentals is just that. House is very easy to maintain because it was my old residence and I fixed everything living there. Only problem with it is it makes say $50 a month after the dust clears. Do you mind me asking what your strategy is on these homes?
I buy the house and try to get the purchase and rehab to total around 70% of ARV,I finance using hard money for 70% of arv, so I’m just out closing cost, insurance and holding cost,I don’t flip, i get a tenant and them convert to conventional financing,
Andy thanks, if you go to traditional financing then you would be facing the same problem I am having, not able to get more than x amount of mortgages.
your limited to 10 conforming mortgages,but with portfolio loans (loans the banks hold and don’t sell), you can have as many as you want, but you won’t get as good of terms as you do on the 10 conforming mortgages…if you have a cheap house convert it to the portfolio and use your conforming loans for your more expensive properties
Look into Subject To (pay off an owner’s arrears and take over payments), Lease Options (low money down, you can lease property until you find a buyer to do an assign). Hard money is not a bad option either (you’re going to pay for it, but if you’re making money it’s worth every penny).
For Subject To’s you may consider signing up for a site that offers preforeclosure info. You can check records but one my friend is a member of costs $300/yr. Worth it not to have to sort through records. He sends out letters, they come running and he gets a few deals out of it.
And to elaborate on hard money loans like andydallas is saying, there are plenty of hard money lenders that will lend you 70% ARV. You maximize the money you have to work with. Yes there are a lot of fees and if you can do 2 deals with the cash you have or you could do 2 deals with hard money, obviously you should use your cash. But the point to hard money is it allows you to do 5, 6, 10 deals or however many you can handle. It’s worth the fees if you’re making 20x your fees back in profit. And about converting it to conventional, when you have 20 or maybe 30% equity (after your reno) the banks should be willing to refinance it for you, but I’m not sure about the maximum number there.
Hard money sounds like your best bet to me. Contact some other investors maybe you can work a deal out with them? Half in cash up front and the other half over 4 years or something. You could be the lender. Anyways just an idea, trying to keep them creative juices flowing.
I wish they still had blanket loans, those where awesome and I can’t wait until they come back. You can use credit partners, hard money, private money or partner with money guys. You can even wholesale, do lease options, subject 2, etc.