Trying to Scale- Lending Help Needed

[Rod Merriweather]

Hi everyone, Need some advice. I currently have 3 rentals and my offer on a 4th was excepted yesterday 11-19-2024. My dilemma is that one of my properties is worth about $400K and I owe ($40k on a HELOC & $50K on the mortgage) and I'm on tract to pay them both off in 16 months- paying ($2000 from the renter and me paying $4000 a month on the HELOC= $6000 per month total) I plan on doing this until both loans are paid. My ultimate goal is to keep scaling buy 2-3 LTR and hopefully a 4+ plex hopefully within the next 12 months. I have really good income & have good credit -middle score is 768.

I've reached out to lenders here on Bigger Pockets- but their rates & terms seem high (DSCR or just not good terms)- I qualify for a conventional loan, but my DTI is almost maxed so why pay an extra 2-3% DSCR when I don't have too. I also reached out to a small local bank that is offering me a $200K cash out refi- at 6.7/8 60% LTV- 30 year fixed. This would pay off the HELOC and the mortgage and give me some cash to keep scaling. It's not great either but they are stating if given this deal once I have 5 properties; they will allow me to convert my 5 properties (I have an LLC but the properties are all in my name not in the LLC yet) over to a commercial loan (5 properties min) and give me a line of credit to continue buying additional properties. At that point if would free up my Debt-to-income ratio (Nothing would be in my name & I could start growing again). Right now I'm maxed out on the DTI and I don't have the additional cash to keep putting down 20-25%. My question is should I keep working with this small local bank, is this a good deal, can I get a better deal, what are my other options for scaling as a small real estate investor. Any advice would be greatly appreciated. PS: I'm sure I can great a nicer LTV but my business taxes don't show large gains on paper. If I left something out please just ask. I'm headed to work now. Thanks

[Robin Simon]

Quote from @Rod Merriweather:

Hi everyone, Need some advice. I currently have 3 rentals and my offer on a 4th was excepted yesterday 11-19-2024. My dilemma is that one of my properties is worth about $400K and I owe ($40k on a HELOC & $50K on the mortgage) and I'm on tract to pay them both off in 16 months- paying ($2000 from the renter and me paying $4000 a month on the HELOC= $6000 per month total) I plan on doing this until both loans are paid. My ultimate goal is to keep scaling buy 2-3 LTR and hopefully a 4+ plex hopefully within the next 12 months. I have really good income & have good credit -middle score is 768.

I've reached out to lenders here on Bigger Pockets- but their rates & terms seem high (DSCR or just not good terms)- I qualify for a conventional loan, but my DTI is almost maxed so why pay an extra 2-3% DSCR when I don't have too. I also reached out to a small local bank that is offering me a $200K cash out refi- at 6.7/8 60% LTV- 30 year fixed. This would pay off the HELOC and the mortgage and give me some cash to keep scaling. It's not great either but they are stating if given this deal once I have 5 properties; they will allow me to convert my 5 properties (I have an LLC but the properties are all in my name not in the LLC yet) over to a commercial loan (5 properties min) and give me a line of credit to continue buying additional properties. At that point if would free up my Debt-to-income ratio (Nothing would be in my name & I could start growing again). Right now I'm maxed out on the DTI and I don't have the additional cash to keep putting down 20-25%. My question is should I keep working with this small local bank, is this a good deal, can I get a better deal, what are my other options for scaling as a small real estate investor. Any advice would be greatly appreciated. PS: I'm sure I can great a nicer LTV but my business taxes don't show large gains on paper. If I left something out please just ask. I'm headed to work now. Thanks

Are you saying your DSCR quotes are 2-3% higher in rate or are you talking points up front? If its rate, then that looks way off, DSCR rates should be in the same neighboorhood, like .5%-1% higher depending on some prepay stuff