All Forum Posts by: Rod Merriweather

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Thanks everyone, Ideally I'd just like a LOC & to use my property for collateral. Does anyone offer that other than a HELOC ?

Hi everyone, Need some advice. I currently have 3 rentals and my offer on a 4th was excepted yesterday 11-19-2024. My dilemma is that one of my properties is worth about $400K and I owe ($40k on a HELOC & $50K on the mortgage) and I'm on tract to pay them both off in 16 months- paying ($2000 from the renter and me paying $4000 a month on the HELOC= $6000 per month total) I plan on doing this until both loans are paid. My ultimate goal is to keep scaling buy 2-3 LTR and hopefully a 4+ plex hopefully within the next 12 months. I have really good income & have good credit -middle score is 768.

I've reached out to lenders here on Bigger Pockets- but their rates & terms seem high (DSCR or just not good terms)- I qualify for a conventional loan, but my DTI is almost maxed so why pay an extra 2-3% DSCR when I don't have too. I also reached out to a small local bank that is offering me a $200K cash out refi- at 6.7/8 60% LTV- 30 year fixed. This would pay off the HELOC and the mortgage and give me some cash to keep scaling. It's not great either but they are stating if given this deal once I have 5 properties; they will allow me to convert my 5 properties (I have an LLC but the properties are all in my name not in the LLC yet) over to a commercial loan (5 properties min) and give me a line of credit to continue buying additional properties. At that point if would free up my Debt-to-income ratio (Nothing would be in my name & I could start growing again). Right now I'm maxed out on the DTI and I don't have the additional cash to keep putting down 20-25%. My question is should I keep working with this small local bank, is this a good deal, can I get a better deal, what are my other options for scaling as a small real estate investor. Any advice would be greatly appreciated. PS: I'm sure I can great a nicer LTV but my business taxes don't show large gains on paper. If I left something out please just ask. I'm headed to work now. Thanks

Hi

Do I need to show that money (25%) in my business account for two months? - or does it matter? 

My tax returns (new llc) doesn’t “show” a lot of profit- a lot of losses on paper. 

Quote from @Olivier Colson:

Quote from @Rod Merriweather:

Hi I’m new to Bigger Pockets. I love your post. I’m a smaller investor ( 4 properties- 2 long term, 1 short term, & personal home with lots of equity). 800+ credit score & good income. 

I’m trying to find out how to keep buying properties without continuously putting down 20% of my own money? How did you do it?

Yes, my properties have a lot of equity, but all my interest rates are between 2.8 - 4%. I can only get a HELOC on my personal home, investment property doesn't qualify.

 Hi Rod,

It all started for me when I got my first rental house fully paid, value about 140k, aside of my principal residence. Large banks like bank of America did not allow me to take equity from a rental property, but small local banks are much more flexible!!! It took 80% of the value 1st rental to finance 20% downpayment on 4 other rental houses. So Zero out of pocket. And the ball started rolling like that.

I currently owe $65K on one of my rentals it’s valued at $400k+. I plan on paying it off within the next 3 years. So no out of pocket per se, but I’m not sure if I should be waiting the 3 years or should I be making plans now. 

I want to make plans now but my income to debt is a personal concern. That & I have 4 properties- I have good equity in all my properties, very low interest rates just not sure how to move forward. If I don’t get actionable advice I’ll just wait the 3 years until that one house is paid. I’ll get some kind of loan & use it to fund other deals- I guess? 

Thanks, I don't mind taking out a HELOC on my personal property but I have over 500K equity in my rental properties. I would like to tap that but my interest rates are super low (2.8- 4.0%) I have also considered doing a business line of credit. I'm really not sure what to do????

Thanks for the info 

Quote from @Dave Foster:

@Olivier Colson, One of the best things you can do to leverage up will be to partner with your children.  Do 1031 exchanges into small multi family properties (4 units or less conventional financing).  Your child will apply for conventional primary residence financing.  Your guaranteeing the loan and providing the down payment from the 1031.

Do this where they'll be going to college.  These are called kiddie condos.  Your child gets a place to live and you get favorable rates.  The 1031 floats the down payment.  And the rents on the other units provide great cash flow.  And best of all that child of yours is getting a better education in real world managing the property than they are in class.

Partnering with your children can be an awesome!!! experience.

 Can your child apply for conventional financing- if the don’t have income? Even if I’m guaranteeing the loan?

Hi I’m new to Bigger Pockets. I love your post. I’m a smaller investor ( 4 properties- 2 long term, 1 short term, & personal home with lots of equity). 800+ credit score & good income. 

I’m trying to find out how to keep buying properties without continuously putting down 20% of my own money? How did you do it?

Yes, my properties have a lot of equity, but all my interest rates are between 2.8 - 4%. I can only get a HELOC on my personal home, investment property doesn't qualify.