Rod, you're in a strong position with your credit, equity, and income, and the key now is optimizing your financing strategy to scale efficiently while maintaining liquidity and leveraging smartly.
The offer from your local bank isn't bad, particularly because it provides the opportunity to convert your portfolio into a commercial loan, which would free up your DTI and allow you to scale further. That said, the 6.875% rate could be improved. It's worth exploring other small local banks or credit unions, as they often have more flexibility for investors like you. Building relationships with these lenders can lead to better rates or terms, especially as your portfolio grows.
If the $200K cash-out refinance aligns with your immediate need for capital, it’s a reasonable option to consider, but keep in mind that reducing your equity too much now could limit flexibility later. Another path might be a short-term solution like a bridge loan to fund your next acquisitions while holding off on a full refinance until rates or terms improve.
Given your goals to scale rapidly, keep an eye on maintaining cash flow while growing. Leveraging partnerships or joint ventures could be another way to move forward without overextending your own financial resources. Also, be sure to consult a CPA about the timing of transitioning properties to an LLC to avoid potential complications with financing or taxes.
Take time to compare multiple lenders and products that fit your strategy. If you need a second opinion on any of the terms or strategies, feel free to reach out again I’m happy to help.
Steven
