Available Funds with 2 year investment property HELOC

[Matt Wignall]

Superior, WI / Duluth, MN

NOT MINNEAPOLIS- Superior or Duluth were not options....

I recently closed on a HELOC on one of my properties. I'm looking to purchase more properties and recycle my HELOC to build up my portfolio. Currently have 3 SFH rentals, 1 vacation property (HELOC) and live in a home that I have no payments on.

I'm not cash flowing very much on my 3 SFH's. Great Credit, very little debt and good W2 income.

I'm looking for advice on what to do and the best way to utilize my HELOC.

Any ideas and or advice! I've been looking at SFH's in Superior and Duluth, just cannot get the numbers to work.

Thanks in advance!

Matt W

Superior, WI

[Elizabeth Sawyer]

We've been buying and renting single-family homes in Duluth since 1997. We tend to stay in either Lakeside or up by UMD. All of our houses are always rented, mostly to college students. We keep our rents low on purpose and keep our properties well maintained (but not particularly updated). One of the best things we ever did was develop a relationship with a realtor who is an investor himself. He finds us the properties, mostly before they've been listed. Most of the houses have been rattletrap dumps that we've rehabbed. We used our HELOC several times to purchase and then paid the HELOC off with proceeds from rents received from all properties. College kids don't need a palace. They're happy to have a washer and dryer, and because of that and keeping our rents low, we have been able to cash flow all of our properties. They are now all mortgage free and we can use the cash to retire or improve the properties. Using the HELOC to purchase is brilliant for the distressed sellers. It gets them cash and out of their dump quickly. There is a high demand in Duluth, and one of our competitors recently quit the business because the City of Duluth is so difficult to work with. So with that competition gone, there's more to go around. Find a good realtor/rehabber/investor (all the same person) and you'll find some great deals. The realtor is key and you want someone who has rehabbed and rented houses themselves. They know the ins an outs and can help you get where you're going. In my opinion, and from my experience, a realtor who hasn't rehabbed and rented lacks critical experience that you would be able to benefit from. Our lawyer is also a rehabber and renter and that kind of experience is very valuable and will bring you a long way in your journey to be a real estate mogul! The other thing we did was develop a relationship with the neighbors. We mow the lawns ourselves. We rake the leaves ourselves. We plow the driveways ourselves. We keep the properties neat and tidy even though they're rented by college students (funny story: one of our houses is directly across the street from UMD's football field. Last year at homecoming our back yard was full of about 400 college kids having a party. Surprisingly, they didn't trash the place and the police were never called. But the neighbors saw it and let us know). Because we're a presence in the neighborhood and the neighbors can see that we're diligent property owners, they will approach us when it's time to sell their property. We've had this happen twice. The HELOC allowed us to close fast with cash. Who would ever think raking leaves is networking! Those houses never made it to a listing and the property owners didn't need to update, stage, etc. which would have driven the price up on the retail market. Good luck. Be creative and persistent. You'll get there.