Closed on 5th rental - 1st with a private loan!

[Rodney Kuhl]

Our strategy was initially to purchase as many rentals as we could with conventional mortgages (i.e. I can have 10 mortgages in my name and my wife can also have 10 in her name), and then figure things out later on how to keep acquiring properties. But things have changed.

We were driving for dollars a couple of months ago (the first time I have convinced my wife to D4D with me, another success!). After writing down a bunch of addresses we were going through the tax records putting together our mailing list and we came across a property that was owned by a small bank. We emailed the bank to ask about financing options they offer and to see if they had any properties for sale, and lo and behold, they sent us a list of their properties. Although most were not properties we were interested in, there were 2 that caught our eye. They had previously listed the property but the listing expired. We offered significantly lower than what they listed it for and much lower than market value, and they accepted! The only catch was, being that the seller was a bank, it had to be a cash deal. Enter the private lender!

We were able to close the deal with his help. Being that private lenders rightfully charge a higher interest rate, I was quite hesitant about the purchase as the cash flow numbers weren't as great as we usually target. Still, with the purchase price and the small amount of rehab that was needed, we were set to acquire a good chunk of equity (we had to as the lender would only lend up to 60% LTV). However, after some convincing from my mentor and from my wife, we moved forward with the process and closed (our first closing where we weren't at the title company to sign the paperwork, another new experience) on Dec 29th! We figured that even if we don't cash flow very well for a year, we can re-fi to a conventional mortgage after a year and then the numbers look good. Rehab started on Friday with a 2-week timeline (very minor work needed), and we hope to have tenants in place very soon.

Overall it was a good learning experience and so far a success! Hope to find #6 soon!