My Strategy... Thoughts or Advice?

[Scott Bartlett]

I just closed on a cash out refi, using the equity in my first rental property (no debt attached to this parcel).

And now as a result, I've got two more properties under contract and should be closing on them with in the next two weeks!

I purchased my first property in May of 2013 for $8,750 with all cash (had a total of $12,000 cash invested in this property) and took out a Prosper Loan ($10,000) to fix up the property doing all of the work myself. I have a very high APR on the Prosper Loan and currently working on paying it off. This property rents out currently for $500 a month.

I just closed out a cash out refi on the property, which appraised for $45,000, and got 75% of that value ($33,750).

Using those funds we locked up two more properties. A REO that was listed for $9,900 (ended up going $11,000) due to multiple offer situation. This property has a ARV of approximately $60,000 to $65,000 and will rent for $650 to $700 a month. This property needs about $7,500 in materials and about 3 months of work (which I will be doing my self again).

The second property is actually from a relative that found out that I buy real estate properties. He wanted $30,000 for his 2nd house, which has a ARV of around $60,000 to $70,000 and needs about $4,000 in materials and will take about 2 months to renovate. Well, after seeing the property, (it was in worse condition then I had thought) and ending up offering $10,000 down with $5,000 to be paid over a year (land contract) interest free. This property will rent for $600 to $650. The reason I didn't just give the full $15,000 is because I'm trying to pay for all of the renovations in cash, and not secure any more debt and I can't give the full $15,000 right now without running short on cash.

After the renovations are done, I will have one mortgage (cash out refi) for $33,750, and three properties valued at approximately $160,000 to $170,000, giving me about $130,000 equity and monthly income of $1,800. (I won't go into details about expenses, but I will be profiting about $900 a month.

I am debating on paying off the mortgage before using those three properties in a blanket loan or another cash out refi, or just wait about 6 months, and use the equity in the two "free and clear" properties to purchase another 2 to 4 properties.

Thoughts or advice? My plan is to keep growing my portfolio via equity by buying properties that will provide equity.