Actually Youngstown area

[Marshall C. Call II]

Hi folks. Sorta new to investing and sorta new to BP. Does anyone have advice on financing? I am 2 conventional bank loans in and I don't mind doing it this way. The problem is the 25% down payment. Even on a $30k house, I need $7500 plus escrow and $10k-$20k for rehab. The bank is charging points as well just to get 8+% on the loan. Any thoughts on more creative financing other than taking money out of my personal house? I don't know any private lenders and hard money makes me nervous since I'm a buy and hold guy and the payback isn't as cut and dry as it is on a fix and flip. Appreciate any input and I'm glad to be part of the BP community!

[Dan M.]

Hey Marshall,

In my opinion that 8+ is way too high, I would speak to another bank or a DSCR lender. How is your credit score? You may want to start working on your credit score to save big long term dollars on better rates in the future. Noone has a crystal ball but rates supposedly are coming down in 2025 that should be enough time for you to do whatever you have to do if your credit is below 750.

Some ideas besides that:

Depending on how much equity you have you could do a cash out refinance to get money that way. 

Do you have a 401k you could take a loan from?

Save relentlessly. On everything. From groceries to your electric bill - on ANYTHING you can. Small sacrifices lead to long term gains. This includes the expenses on your current properties. Doing this for a few years with honest effort will put alot of extra money in your pocket. 

Could you rent your primary and move into a new multifamily to save expenses that way, then move out in a few years? Could you rent out part of your primary to generate extra income?

[Marshall C. Call II]

Hi Dan and thanks for commenting.

I agree 8% is too high but I still get decent cash flow at that rate. The first mortgage is 4.625% so that one is better still.

I will certainly look into DSCR loans

Credit score is 780

I wouldn't mind doing a cash out refi. I hadn't thought about that. I'd have to look into how much equity I have.

I already took a 401K loan for the rehab on the last property, and I'm only allowed 1 loan at a time in my current 401K. It has about 4 more years for payback.

The saving is something I am working on. I have about 10K but that's not going to get me anything right now. It's building slowly but surely, and I definitely want to keep 5k or so as an emergency fund.

I have thought about renting out my current house or selling it outright and house hacking. It's paid off and I have a lot of storage for the stuff I need for rehabbing so I would need to find a place that has enough storage for all that.

REALLY appreciate the feedback and I will look into equity on the current properties and DSCR loans.

[Mike Klarman]

At those entry points you actually have good terms, is it a credit union?

[Marshall C. Call II]

No it's a national bank