creative financing for rentals

[Reece Riggle]

I am in the process of buying 3 rental houses. These are currently under contract and pending financing. This is a package deal for $130,000. My estimated value for the 3 homes is $220,000 once a $40,000-$45,000 remodel is complete. My question is should I refinance all of these once the remodel is complete and pay off my line of credit. I was considering flipping one house as it does not meet my 3 bedroom criteria. I could use the proceeds to pay down my loans and payoff the line of credit. My goals are buy and hold for long term. This is my second deal.

House 1- rents for $850 a month- buying for $60,000

House 2- rents for $700 a month- buying for $40,000

House 3- Is in need of a $30,000 remodel. Will rent for $800-$850 once remodeled. - buying for $30,000

[Joe Hammel]

Can't say this is exactly in my wheel house so take me with a grain of salt, but happy to brain storm here so I get "notifications" when others answer...

- Sounds like you used a line of credit to buy..

- I'd probably refinance anything you want to keep and then like you said, sell the one you don't. 

- I think having the other 2 in mortgages to keep your line of credit liquid would be smart.. not sure the interest rate you have on your line of credit, but locking in a record low 30 year fixed rate as you can do right now, is often times the smartest move in today's market

- I wouldn't pay these off, I'd use all cash out money, flip proceeds to go buy another... Leveraging your money this way is how to get the compound effect. 

If you Pay off a mortgage or credit line, you're paying off a 3% interest (most likely around here) whereas if you pull out every penny you can and go buy another deal, you will be earning 12,15,20,+ ROI. So any extra money is better off spent on another house rather than paying off what you have.

Unless your goal is 4 paid of rentals... Highest ROI is in scaling.