All Forum Posts by: Blake A. Rivers

@Cooper Raines is correct about people losing deals to cash offers consistently and the options are limited for financing.  You should try to get a conventional loan if you don't have a property under contract, because banks take a long time to close any loan. Hard money loans are only good if you can not get financing for a property from a common lender. You also have the Private Money Lender who loans on the asset you are buying and in most cases gives 100% of the rehab costs to maximize your returns. The private money lender can close in 15 days and offer is as good as cash.

The best return on your investment would be either Delray beach or Pompano beach in south florida. Both areas have a lot of foreclosures of houses that are 3 bedrooms and 2 baths. They are generating on average 1800-2200 a month without renovations and the areas are appreciating in value. I have seen first hand how the rental market has gone up and is ripe for great profit margins.

The best option for you it seems would be to buy the portfolio in 2 separate transactions. Place the properties that need rehab in a bridge loan for 12 months to renovate the properties and get tenants in place. Then Refinance out to recoup the capital expended to buy the properties
(BRRRR). 2nd transaction would be once the properties are stabilized finance the entire portfolio for a second major cash-out and a rate in the low 4's while holding your debt in the LLC and not in your personal name. It is expensive to buy a portfolio and sell off the less desirable properties because most lenders charge a prepayment penalty of 120% on the appraised value of the house to remove it from a portfolio. They call it yield maintenance and it is terrible( highly suggest against loans with yield maintenance). If you want to hold the properties long term yield maintenance is a non-issue.

It all depends on your end game. If you are trying to amass a big portfolio of rentals your local lenders may not be able to help as much as a private money real estate loan provider. They close quickly, have comparable rates to a bank loan and offer escalating loans based on experience. If you want to scale you need more than a local bank or hard money lender because at some time your personal DTI will be maxed out and you need to put your portfolio into a non-recourse portfolio so you can "clear your personal deck".