Paid cash for 5 rental properties. What now?

[Lucas Bonasio]

I have purchased cash 5 sigle-family rental properties in Texas (I live/work in New York).

The investment for all 5 properties together was of roughly $550,000. All properties are now rented, generating PROFIT of $3500 a month.

My goal is now to expand my portfolio of properties in the area, using the equity of these 5 propeties + OPM to purchase 10 (or maybe 15 other properties).

Any suggestion on how I should go get the money to buy all these other properties? I was thinking about giving a 20% down on each of them, but I don't know how to get the money (or the best place to get it from)

What type of mortgage and how to get it approved?

Thank you!

Lucas

[David J.]

@Lucas Bonasio

@Account Closed

Ryan is correct in that we need to know how the properties are titled. A quick search found your Texas LLC, so if they are title in the LLC you won't be able to get the 30 yr Fannie loans everyone is pushing you towards. you may be able to refi and retitle at the same time to get these but Fannie won't finance in the LLCs name.

One suggestion is rather than a cash out refi (which requires a closing and new title insurance) you could find a portfolio lender that will let you pledge your equity in the properties (usually up to 80% or so) as collateral for the new purchases. My lenders let me do this to access equity for new pruchases. The end result is a 100% LTV portfolio loan on the new purchase with the equity in one of the free and clear properties pledged as collateral for the loan.

There is so much push on this board for conventional (Fannie) financing that the benefits of commercial/portfolio loans are often over looked. In my opinion, once you go commercial you never go back. The flexibility, speed and ease is so much greater than a conventional route.