Next Steps to grow

[Lee G.]

I finally pulled the trigger on a nice 4-plex. Things have been running great and I'm really enjoying all aspects of investing and running this building. I really would like to do more deals and have found some good deals that fall into into my model (buy and hold, 2-4 unit student housing) but I know I won't get approved for the financing on them. I was laid off in October but have pulled together a bunch of consulting clients and have the income from the building so there's money there but not the w-2 income that the banks like. I've talked to a couple brokers and they say they have some lenders who will do deals with me if I have 40% down but that doesn't make a whole lot of financial sense because my returns are significantly diminished.

So my question is what would you do in my position? I see a couple options but perhaps there are some ways you can point out -

1) Suck it up and get a "real" job with w-2 income again
2) Put the ambition away for awhile until I have more cash on hand
3) Pound away looking for seller financing deals
4) ???

Thanks for any advice.

[Marcus LaGrone]

4) Change your model.

Many 1st time investors unfortunately don't think about how they are going to fund the next deal until it's too late. This should be part of your business plan. Real estate is one of those unique businesses that can fund themselves in a very short period of time.
Knowing this, we as investors have to continually look ahead.
The problem with your business model is that it stopped at acquisition number 1 or it was dependant on another source of income to finance future ventures. It's time to get back on track.

I just recently posted a similar post in another area, but find a hard money lender in the area if your current lender is cannot fund future deals with less than 40% down.

Instead of focusing on rentals, focus on rehabs.

Buy 3 rehabs (1 at a time), fix them up, sell them, and then buy a rental. Make this your new model for a while and you will not have to worry about funding future ventures.