Beating the multiple rental property loan poison pill

[Anthony R.]

Okay so a quick background so you can understand how I cornered myself in this position. 

Background:

When I got out of the Army I bought a duplex foreclosure with my former wife. We divorced about a year later and sold it for almost double. Being probably the only man in the world that profited from divorce, I was hooked. 

I spent about a year and a half renting a studio apartment, finishing my degree, eating ramen, raising my son, job hunting and craving to build my portfolio again. 

Long story short, it's now been 4 years and I have two four family buildings, and positioning to buy my next building. 

The Buildings:

Building 1:

Units: 4 Fully Rented

Financed: GI Bill - No PMI

Condition: Good

Location: Great

GRM: 55

Cash flow: Positive - 40% profit margin after expenses 

Building 2:

Units: 4 - 3 Rented, I live in 1

Financed: FHA - PMI from hell

Condition: Fair-Good - I do repairs every month though to continue to improve it.

Location: Great

GRM: 64 (drops to 47 if I move out)

Cash flow: Positive - 11% profit margin after expenses (jumps to 36% if I move out)

After you take out monthly repairs the two buildings combined generate a 14.5% profit. Not including the equity in the property of course. 

The Problem:

If I want to get another loan to buy my next building then I need to carry a ton of cash. First, I need to have 20% down because it's going to have to be a conventional loan. So that's going to be between $14-20k if I am looking for a duplex. Second, I need to carry 3 months of expenses for both of my current buildings PLUS 3 months for the next building. Just my buildings alone are going to require $10k. So assuming I find another building that I am interested in, without taking into consideration that it will need repairs, I will need to have on hand somewhere between $27-37k. I'm close to this already but I don't want to tie it all up in real estate.

My question:

Give me a blue print. I need a map. I have gone almost as far as I can with the freely available advice on the web. I need a building purchasing plan. How do you do it? How do you go from being poor to having 100 units? Everyone I meet either is looking to break into rental investing or already has over 100 units. I don't find many people stuck in this financial purgatory. I mean, I'm not complaining, I do okay for myself. I don't go to work each day and fear losing my job. That's a nice place to be. However, if I don't figure out what my next step is I am going to lose my mind. I have been grinding on this for over a year now attempting to decide what the next step is. Do I sell and trade up? Do I hold onto what I have and save until I can buy something out right? Do I continue to take loans? Am I missing some fundamental part? 

My only hang up is that I don't want a partner. I don't play nice with others and people have a tendency to let you down when you need them. What ever plan I decide on needs to be self reliant. 

Thanks for any advice you can offer. My cup is empty. I'm ready to learn.

[Jacob Sampson]

I have 16 units, but I'm a fan of the boring plan of have large piles of sweaty cash.  Nothing protects you from calamity like tons of cash.  I doubt thats the answer you wanted to hear, though.  It's OK to take a breather.  Take some time to store up cash and protect the progress you have made so far.  That probably isn't the advice you want either.

Now that you have some experience you could look for a partner that will put up the cash for 50/50 ownership.