How do you buy more than 10 properties?

Question

Hello everyone! I was wondering if some experienced investors could weigh in on how they expanded past 10 properties? I know the first 4 are much easier to finance and then 5-10 have a much stricter set of guidelines in order to qualify for financing. Thank you for your input!

Ben Thomas · Answer

@David Dachtera Thank you for your help David! I appreciate your help!

David Dachtera · Answer

@Ben Thomas,

Some folks figure it by the value of the properties in each LLC rather than the count. Others go by equity, but that disregards the lender's position.

Ben Thomas · Answer

Thank you for the advice Troy! What quality of properties are you buying for all cash? It seems that for a lot of these cheaper properties there seems to be more issues that arise from very cheap properties opposed to a higher end rental. I would love to hear how much work has to be put into those foreclosures after you purchase them too.

Ben Thomas · Answer

Thank you for your input David! How many properties should I have in each LLC? I have seen both extremes where an individual has all their properties in one LLC and where one has an LLC for every individual property. From my research it seems like the 5-10 property per LLC is the average for most investors.

David Dachtera · Answer

@Ben Thomas,

You'll want to learn about buying properties in a business entity structure. That way, when an entity like an LLC reaches it's limits you can start another LLC. It multiplies you, so to speak.

Properly structured and insured, a business entity structure can help you with asset protection, has tax advantages and and can help you with your estate planning, as well.

S-Corps and LLCs can also build credit separate from your personal credit. So, if your credit is not so good, starting over in a business entity gives you a "clean slate" so you build the entity's credit and not further harm your own.

Troy Southerland · Answer

Hi Ben,

I've been able to buy several properties because I buy foreclosures, so the loans and payments are much smaller. So I start off with using a loan to buy one foreclosure, use the rent (cash flow) to make payments and save up for the next down payment, get another mortgage, use the income to make the second home's payments, and so on and so forth. Some properties, I bought with cash.

Now these are the secrets that really help you make a big buck:

1. The cheaper the property, the better.

2.  Find contractors that work for good prices but they have to be reliable. If not, you're taking 5 steps backwards.

3. If your cash flow is really good, you can save up to buy properties with cash, which is how I was able to do so.

Let me know if you have questions.