Financing my second rental

[Robert Sapienza]

Hello everyone! Have a question and ill keep it as short and simple as possible. I have just purchased my first rental property (quad) 100% with money from my HELOC (primary home which is paid off). So my now owned quad has no mortgage/lien. Without getting into the numbers, (property is cash flowing very well) what is the best way to get my financing set up for my next investment? Another LOC? Cash out refi? NOTE: I am self employed and have been for years. Don't show all that much income on tax returns. In a perfect world I would keep getting HELOC's and purchasing houses with each new HELOC but I don't think that is a reality. Anyone from experience been in my shoes? Cash out refi probably will work for number 2 but after that my debt to income will look shot and I will most likely have trouble scaling from there. Any words of wisdom are much appreciated. Thanks!

[Bob Green]

Robert,

First questions is how quickly do you want to grow? If 1-2 per year is good for you then stick with the heloc and refinance into a conventional mortgage every 6 months.  But, if you really want to build a cash flow machine, you could set up a acquisition and rehab revolving line of credit that is based on 5X your liquidity which includes your heloc, checking, savings and retirement accounts. Acquire foreclosed properties, rehab, rent and refinance into a portfolio loan every 90 days and cash out your original down payment funds to use for the next project. I've been using this strategy for years.