Need advice to move forward in difficult financing environment!

[Paul Garcia]

Hello everyone.

I read countless of posts and articles online about investing in real estate, but I can't find anything that is related to my current situation. I'm hoping that the wisdom of this community can give me some advice.

I graduated from college in May 2013 (age 22) and started working as a commercial real estate analyst in June 2013. My salary is $56,000 a year and have no personal debt/expenses (credit cards, car, rent, etc.), I'm living at home and trying to chase my dream of becoming a full time real estate investor. By working in college and hitting some luck with the stock market, I was able to purchase my first SFR property in cash immediately after graduation. After saving for six months, I purchased another SFR with a conventional mortgage (20% down). In June I closed on another SFR with a conventional mortgage (20% down). I have virtually maxed out my Debt-to-Income ratio (41%). WHAT THE HELL CAN I DO FOR THE NEXT TWO YEARS? I knew this point would come where I would be at a standstill with the bank, but I thought I would be able to figure something out. I can't borrower anything from my parents and don't have the DTI to take the equity out of my first property. With my rentals and salary I'm scheduled to earn approximately $71,000 and I'm saving as much of that as possible. I am not opposed to commercial loans, but it will take me another year to save up $50,000 cash and with that amount I'm scrapping the barrel of 5+ unit buildings. Has anyone shared these same experiences? Is there any creative way I can move forward? Your comments and advice would be greatly appreciated. Chicagoland area.

[Chris Kennedy]

@Paul Garcia sounds like you're kickin' some tail! Nice job on saving and being smart with your cash at such a young age, you're miles ahead of where I was when I just graduated college! 

At this point I think you should stop into every small/mid-size bank in town and start talking to the guy or girl in charge of lending. See what they can offer in the way of solutions. You're in a great position to start building a relationship with local lenders, and I think you will find more than one of them will be happy to offer you a loan for the purchase of more rental properties. You probably won't get terms like you get from a regular big bank, but the small banks will be much more open to lending on a large number of cash flow positive rentals. Expect something like a 5 or 7 year balloon, 20 year amortization, and interest rate between 4.5-5.25%, with a 50-75% LTV.

Good luck and keep us posted!