Best Practice Finance Options to Scale Business

[Jerry Pollio]

Hello from Houston Texas

I am an advanced newbie which means i am reading the books, listening to the podcasts so i can dive into my 1st S

FR buy. I am committed to the concept of building passive income and firmly believe in hard assets as a way to create legacy wealth.

I am a little unsure about the following, the financing piece. I am starting to understand that financing for SFR through conventional means is difficult. How do you scale the business from one to many buys? What is the best practice for a buy and hold strategy on SFR's? There are turn key resources that mention intro's to preferred lenders who will mortgage?

Thoughts and guidance are sincerely appreciated.,,,

[Chris Youssi]

Jerry/Marshall let me share some information on Commercial lending that might make some sense. I used to own 8 SFR/ townhomes that were financed thru the secondary market- fixed ( now down to only 2 ) money for 30 years. As an investor you are allowed 10 for yourself - 10 for your spouse ( assuming they have W-2 income separate from yours ) for a total of 20. We grew our SFR very quickly since 2015 purchasing now 32 SFR all financed in the commercial world. I have a LOC ( line of credit ) where I am able to pay cash for my purchase - we will use 50k as an example. I put 20 in rehab it then appraises for 100. I pay off the first 50 get my 20 back and then refi out do it again and again and again. Currently I have 3 SFR in production phase. Back in 2015 because of my 8 loans in the secondary market difficult to grow my portfolio so turned to a local community bank about $500M in assets - sister bank somewhere in the $4B range. I would recommend this approach for 2 reasons:

1.) Gives you a chance to grow your portfolio quickly

2.) The secondary market will require you to have at least 2 years of tax returns showing you have / can manage investment property. Once this is verified you can then refi from the commercial world into ( for a fixed rate longer term loan as commercial loans are typically 5 year balloons that reset after 5 with current rates )  the secondary market. Other thing to be aware of is secondary market has some strange rules about reserves once you reach anything over 4 units. 

I would /have interviewed 2/3 lenders ( community banks not the national lenders as they have much more flexibility / also credit unions  are a great source ) and shop just like anything else. I have meetings next week with 2 new lenders for a very large project we will be building and will be using some of these thoughts I have shared. 

Hope this helps Happy hunting!