STUCK! Looking for advice/mentorship on how to leverage portfolio to level up

Philadelphia, Pennsylvania
Personal Finance
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STUCK! Looking for advice/mentorship on how to leverage portfolio to level up

Jordan B.
Rental Property Investor · Conshohocken, PA · Member since 2014 · 58 posts · 26 votes

I feel like I am stuck getting to the next level and seeking advice from those in similar positions. So far I have been just saving up to buy the next rental property and feel like I am on the slow route to success. I have not leveraged any of my properties yet which includes both primary and rentals. All properties were purchased under my personal name and are not under an LLC. Here is where I am at currently:

Primary Property:

  • Valued: $450,000
  • Owed: $243,000
  • Mortgage: $1350
  • Interest Rate: 2.875%

Rental #1:

  • Valued: $300,000
  • Owed: $107,000
  • Mortgage: $900
  • Rent: $1,850
  • Interest Rate: 4.5%

Rental #2:

  • Valued: $270,000
  • Owed: $116,000
  • Mortgage: $910
  • Rent: $1,650
  • Interest Rate: 4.125%

Rental #3:

  • Valued: $300,000
  • Owed: $133,000
  • Mortgage: $1040
  • Rent: $2,000
  • Interest Rate: 3.75%

I work a 9-5 job and with the rental profits above, I am able to save about ~$80,000 a year conservatively.

As I mentioned, I am feeling stuck with my current strategy of just saving up the money to buy and renovate each property one by one. I want to revise my strategy and start to leverage what I have in order to make quicker moves with future investments. Given what I have disclosed in this post, what’s my next best move? What should I start looking into? Any questions or additional information I can provide? I feel like there’s a clear answer here but I am just not knowledgeable enough myself to know what to do. What creative financing strategies do I have in this current market?

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Doug Smith
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
3y

Your current rates are off-the-chain great. Unfortunately, that won't be the case on your next deal. I literally just finished answering a question where I went into great detail on the math between Conventional Financing and Rental/DSCR. We started scaling when we picked up capital partners and introduced flipping into the mix. We would flip to fill the coffers a bit, then keep a property. Flip a couple...keep one. We still do that strategy. It may not be right for you, but it's how we grew instead of waiting. I hope all goes well for you.

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  • Doug Smith
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    3y

    Your current rates are off-the-chain great. Unfortunately, that won't be the case on your next deal. I literally just finished answering a question where I went into great detail on the math between Conventional Financing and Rental/DSCR. We started scaling when we picked up capital partners and introduced flipping into the mix. We would flip to fill the coffers a bit, then keep a property. Flip a couple...keep one. We still do that strategy. It may not be right for you, but it's how we grew instead of waiting. I hope all goes well for you.

    3Reply
  • Paul V.
    Investor · Denver, CO · Member since 2016 · 42 posts · 29 votes
    3y

    One of the challenges with real estate is that there are so many different options.

    I would suggest coming up with a plan for what your end goal is and then reverse engineering it.

    If you are looking to grow wealth, a key metric that I would recommend using to analyze different scenarios is Return on Equity.  Have you run that for your properties/portfolio?

    2Reply
  • Jordan B.
    OP
    Rental Property Investor · Conshohocken, PA · Member since 2014 · 58 posts · 26 votes
    3y

    @Doug Smith

    Love it Doug. I'm going to entertain the idea of flipping between buy and hold deals.

    0Reply
  • Tom Fisher
    Rental Property Investor · Charlottesville, VA · Member since 2016 · 45 posts · 39 votes
    3y

    Our strategy has been to consolidate all our rentals (6 units) into a multiple member LLC. We will take the financial performance there to approach a commercial lender for our next acquisition or project. The downside of the multiple member is the additional tax return. The upside is reduced audit risk.

    2Reply
  • Jordan B.
    OP
    Rental Property Investor · Conshohocken, PA · Member since 2014 · 58 posts · 26 votes
    3y

    What does everyone think about taking a HELOC out on my primary? I did the math and can take out $105,000. I would be able to secure two more rentals with that money.

    0Reply
  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    3y

    Given what you told us above, I like the HELOC for you. Or a line of credit.

    We did some of what you have done.  We also did some of what @Doug Smith has done, fix and flip a few to buy a few LTRs.  We also moved into new primary residences and used the capital gains benefits. 

    And then, once we didn't want to move any more, we moved to DSCR mortgages. I always ask for seller financing, and will even be willing to pay a bit more for the house in order to get my terms, 6% interest only loans. This is mainly from tired landlords, who have paid the houses off. I have also bought sub2 a handful of times.

    2Reply
  • Justin Brin
    Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes
    2y
    Quote from @Jordan B.:

    What does everyone think about taking a HELOC out on my primary? I did the math and can take out $105,000. I would be able to secure two more rentals with that money.


    What will be your interest payment on the HELOC and for how many years they are giving you to pay it off?

    0Reply
  • Justin Brin
    Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes
    2y

    @Jordan B. Did you look into multi family?

    If you sell all your rentals and do 1031 exchange into a multi family building will you earn more cashflow?

    1Reply
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