All Forum Posts by: Kerry Pangan

@Michelet Polection

Have you considered getting a Line of Credit on the property and then lending it out for passive income? I got a HELOC on an investment property last year in 1st position with a variable, interest only rate. This allows me to arbitrage the HELOC into private money loans to other real estate investors where I could make a yield spread on the interest. My short term loans were typically in the 10.5-12% range so my yield is roughly 5-6% depending on prime. (My line is prime + 0.75).

If you aren't sure where to start in learning about becoming the bank, I just published a book with BiggerPockets last summer called Lend to Live: Earn Hassle-free Passive Income in Real Estate with Private Money Lending. You can check it out here:

https://store.biggerpockets.com/products/lend-to-live

2 thoughts here. 1. Conventional doesn’t have to be 20%, it can be 5% or even less. 2. Does the second property have to be a house hack? 

I ask because brrrr will scale much faster and 20% down will keep your money tied up. Food for thought. Best wishes to your success 

Save up a downpayment. 5%, whatever.

Leave the FHA alone because of rates. I don't think you have to continue to occupy it, as long as it was true when you got it.

Acquire a second Duplex with a Conventional loan (can do 5% down), move into the Duplex. Rent out the unit you vacate. Now you have 3 Tenants + you. You should be able to count on a decent percentage of the rent as your income to qualify. Once you have the two of them going, your numbers should make more sense.

BRRRR is going to be challenging in the current market without more established of an asset base.

But if you can Hack your way to the two duplexes, you can save up for a downpayment on a SFH at that point and move there, while having two duplexes. At that points, you should have options and a track record.

Check around with different lenders, I do know there are some 10-15% lending options on investment properties.  Also, if you start to examine owner finance options that could open up a lot of options for you.  If you go this route spend time to really understand it, that way you can share with the seller WHY they should owner finance you!  An owner finance seller is still going to want a down payment, but you could even set it up so that your seller even finances the down which gets repaid in the first year or two (this would be a set up that might work well with an AirBnB that has higher cashflow).  Anyway, just some ideas.  

Many people have used the approach where after 12 months, they refinance the first property, go buy the next one with a new FHA loan and rent out the unit they were previously living in for only 3.5% down instead of the 15-20%. Haven't done it personally, but that was the approach I was looking at to get started. You could also look into a vacation home loan which only requires 10% down, as long as it isn't too close by. I have to keep reminding myself as well that those first few properties are always going to be the hardest. Buying rentals is a long-term play. No get-rich-quick scheme here!