Purchased multiple properties, what would be the best route to finance?

[Ac Choudhary]

Ive puchased 14 homes during the meltdown.  Purchase and rehabs were all self financed, and they have all been producing steady rent, 92% collection since 2010.  I've depleted most of my funds and wanted to explore options on acquiring additional funds to expand.  Where would you guys recommend for me to start?  Thanks in advance

[Mike H.]

So you own 14 properties free and clear and have no other mortgages except
your primary residence?

I believe you can do cash out refi's as regular conventional loans on 3 more of your properties and can go up to 75% with great terms (30 yr fixed, low rates). 

I would do that on your 3 most expensive properties first. That should reset your cash position quite a bit.

Going forward, though, I would strongly recommend that you buy using another strategy. I buy all my houses using hard money loans where I can roll the purchase and rehab into the loan. The only thing I come out of pocket for is the points and closing costs.

Then I refi the hard money loan - rate and term - into a conventional (when less than 10) OR a commercial loan.

But at the end of the day, I'm getting all in on 130k to 140k properties for about 65% to 70% LTV or better which means I'm only out of pocket about 5 to 6k in points/closing costs. That will stretch your money a lot further next time!

Now there are some deals where I come out of pocket even more just because I need to get down to the LTV for the hard money lender or the end loan. But the key is that I know that limitation is there and can avoid using my reserves as much as possible if I do.

Where else can you pick up a 135k house for 6k that makes you about 400 to 450 a month gross profit?  How is that not a great way to build wealth?

You will walk away from deals because of the LTV component. But whats better? To be able to grow and maintain a large cash reserve? Or to have to stop buying and figure out a way to put some cash together again?

I say keep it all in your pocket. And for what I've seen, its just so much easier for local banks to do rate/term refi's than it is to get them to do cash out refi's. Thats a dirty word in the banking industry since the bust.