Help Establishing an Addition Construction Credit Facility

[AJ Waller]

Dear All,

I discovered a great business model last year that's worked very well for me during this short time. I am now seeking a way to establish a credit facility (200K to 1M) to help me scale up faster. Suggestions please?

Details: I found a wrinkle in the local laws that allows one to build an addition to a SFR in such a way that the completed building remains classified as a SFR yet is easily rentable as a du-, tri- or fourplex and this does not violate any local landlord/tenant laws.

I bought four SFR houses in my area for about 300k each. For each of the houses, I put minimum down payments (5% to 20%) and rent from each the existing houses is about $1800/month and slightly exceeds the cost of PITI, utilities, gas, electric, and gardening. I can build an addition for about 120k that contains two "units" of 2bd/2.5ba each with lots of premium features (9.5' ceilings, acid-stained colorful concrete floors, radiant heating throughout, central air, LED lights, granite countertops, subway tile backsplash, carrara marble porcelain look-alike bathrooms, etc.)

Still legally defined as an SFR, but in a practical sense, my addition makes the property a triplex. Then the rent from the two additional units slightly decreases rent from the existing building portion to maybe 1600, but then I get 1500 for each of the two new units for a grand total from the completed building of about $4600/month against total costs of about 1600 per month (not including fix-its, but most of the building is new so this is minimal).

This is very profitable and I'm thrilled with the results. Other than the initial mortgages to purchase the four SFRs, I haven't used any loans for construction, etc. I have done this with two projects already and have run out of my investment capital. If I save up for a year, I'll have enough to complete the third addition, then in another eight months after that, enough capital for the fourth addition.

I have tax filings, CPA produced financial statements, LLCs, etc. What I need is capital to speed this up and I was wondering if any of you knowledgeable people out there can suggest some practical (I have a medium level of financial sophistication) way(s) for me to raise money that is realistic for me to do in order to scale this up more quickly.

Thank you in advance for your advice.

AJ