Financing... where am I going wrong?

[Joey Allison]

I have a young portfolio of 5 single family properties worth $775k. I owe $416K. I am trying to refinance and cash out to invest in more properties. The best financing I can find is about 6%, 75% LTV. This eats a significant portion of my cash flow and makes it impossible to eventually hire a property management firm once I do acquire more properties.

I would need to find money around 5% on the high end in order to make it worth it to me. Am I asking too much? Is this impossible to find outside of conventional financing?

My goal is to partner with a lender so I can flip deals to them and quickly move on properties as they come available. Conventional financing has been too slow in the past, and they are oftentimes a pain to work with.

What are you guys seeing on your deal that you finance? Thanks!

[Ola Dantis]

@Joey Allison

You could pace yourself and maybe start with a property that has the highest equity and move that property into a disposition phase in your portfolio. Test the market with that property and see what other investors can offer you for that property in an off-market creative financing type situation. 

Forget about getting better finance rates for a second, you become the bank on that one property, get a good downpayment for that property and use that capital for your next property. 

Alternatively, you can start thinking of how the BRRRR strategy can work for you.

Capital (Cash Flow) preservation is most important and if your cash flow is decent right now, you may want to consider a more paced approach as opposed to divesting your portfolio all at once.