100% LTV properties

[Alex Ng]

Hi, I'm looking to scale my portfolio. I was thinking of purchasing small multifam 2-4 units with DSCR and using personal loans to cover the 20-25% DP. I choose multifam because they have higher cash flow. I ran some numbers on a few markets and I find I can cash flow 500+ with my 100% LTV method. Is this worth pursuing? I am aware 100% LTV could risk overleveraging. I was wondering if there were risk mitigation strategies I could employ. I plan to save the rental income for reserves, screen tenants properly, buy in C+ to B class properties.

[Chris Williams]

Quote from @Alex Ng:

Hi, I'm looking to scale my portfolio. I was thinking of purchasing small multifam 2-4 units with DSCR and using personal loans to cover the 20-25% DP. I choose multifam because they have higher cash flow. I ran some numbers on a few markets and I find I can cash flow 500+ with my 100% LTV method. Is this worth pursuing? I am aware 100% LTV could risk overleveraging. I was wondering if there were risk mitigation strategies I could employ. I plan to save the rental income for reserves, screen tenants properly, buy in C+ to B class properties.

Yea don't do this. You want to have enough space to refinance or sell. If you are 100% LTV and there is something that causes you to sell the property you will have to bring money to close. Also equity gives you enough space to have options. Also the cash flow from the property probably won't be enough to repay the loan. Always have to think worse case scenario $500 a month is about 6k a year in cash flow. In order to be a landlord you will need some reserves for when things break and properties are vacant. You don't want to be cash poor from paying to get into the property. Look into a w2, wholesaling, flipping or wholetailing to build up capital.