How can I add to my portfolio?

Question

Hello,

I am new Pro member on bigger pockets and I'm excited to connect with other investors! I'm also interested in building a team.  My husband and I have three rental units total (1 single family home and 1 duplex).  We refinanced our primary house to finance our recent investment purchase.  We are interested in buying multifamily/apartments.  Now I feel stuck.  How to we find more money to buy more properties? I am afraid of taking out a HELOC because my house will then be worth less than I owe.  Does anyone have ideas on finding investment partners? Should I wait and save for the next five year? What do I do now?

Melissa J moore · Answer

Hi Jonathan- we have 6 months reserves for our rental and cash flow is a little more than $300 each unit per month. We have a goal of 30 doors in 10 years so I'm trying to find ways to accomplish that goal. I'd love to own an 20+ apartment building. If I were to wait until I saved up a 20% down I'd buy a house about every 5 years. That's why I'm looking for ways now to avoid the long wait.

Jonathan Greene · Answer

There is no point to keep collecting alleged assets if you keep collecting debt along with it. How are your units doing each month? What is your market like for deals? How are you finding your deals? Why are you ready to do another deal now when you don't have liquid assets to do it? What about repair costs in the case of a big expenditure? How are your reserves?

Too many people want to collect doors at $100 profit/month and in doing so, collect debt and expenditures that will crash with the market. Take the time to build your 3 doors now into more profitable streams and bank the money before trying to get creative just to own another house.

Melissa J moore · Answer

James Teutschmann- I have not tried fb groups yet I will try that.  I have been to a meetup.  What's funny is the one I've been to teaches topics from bigger pockets! I think I will look for more meetups in my area.

Erik Whiting- When I say I will owe more than what its work I mean when I am ready to sell I will make little or no money.  Plus if the market goes down I could end up with a bigger loan than the house is worth.  Congratulations on your upcoming deal!!

Erik W. · Answer

What bank would loan more money on your home than what it's worth?  I know you're not wanting to use a HELOC so it's not an issue, but that line about not wanting to do a HELOC because then you'd owe more on your home than what it's worth struck me as .... somewhat weird?

As others have said, if you find good deals, the money will not be a problem.  The first go round is a little strange because it's kind of a "chicken and the egg."  No one wants to commit until you have the deal, but until you have the money it's hard to lock in a deal.  I'm working my first multi-fam deal right now and have been putting the word out for about 6 weeks.  Found three money partners so far and I made my first offer yesterday on a 20-unit complex.  I've been walking both sides of the fence: finding the deal off market to limit competition and give myself more time to put the finances together.  We'll see what happens.

Good luck.

Roni E. · Answer

I would first make sure you digest a lot of information. Try to focus on a market and build your team. Your team can be from partners, investors, bank contacts and so forth. Last items do not forget us small folks when you make it Big time.

Erik Hatch · Answer

OPM or other people money and then there is syndication. Plenty of info on syndication in the forums.

James Teutschmann · Answer

There is always something that you can do! I applaud you for getting started and finding creative ways to get going. I would look up FB groups or other real estate meet up groups in your areas. Here I have found real estate agents, contractors, and others that I now use. They are great places to continue learning and building a team. If you don't have any money, you could begin looking for an investor who wants to put money into real estate but doesn't know how to/wants to be hands off.

I made some PDFs using the calculators on BP to show what a potential deal would look like. I began talking to people telling them I am looking for an investor to finance the deal. I sat down with one, ran him through it and we made an offer. You can practice analyzing deals, talking to contractors in your area to find if they are investor friendly and learn more about how they charge for different projects. Find what you want YOUR strategy to look like and run after it.

But seriously, If you aren't utilizing meet ups I would start there! Surrounding yourself with like minded people is so valuable. Deals will start falling in your lap if you start looking for them in the right places! :)

Taylor L. · Answer

Don't just wait! Get out there and build your network at local REIA events. Take people to coffee and get to know them. Some of them would be great business partners! Put together a plan to partner with others using tried-and-true strategies you can learn about right here on BP, on YouTube videos, podcast, on and on!

There are so many options to get money into your business other than just saving it up. You just need to learn what's out there, pick one, and work on it consistently over time.