How to grow portfolio after reaching 10 mortgages

[Neo]

Whats the best way to keep adding units to one's portfolio after reaching the 10 mortgage limit? I am at 6 now and just went under contract on a 7th. I would guess I will reach 10 mortgages sometime in early 2019. I dont want to pay off any properties as I would rather use funds to continue acquiring. I have read a lot about using private lenders but curious how mustachians are getting around the limit.

[Another Reader]

Local banks doing portfolio loans, commercial loans, and cross-collateralization are common solutions.  Might also be time to move up in product to multi-family or commercial properties.

[Neo]

My properties are mostly multis with 4 units or less. So you think local banks are the way to go? I will google cross collateralization.

[tralfamadorian]

Your next step would be to ask local/regional banks about portfolio loans. Rates will be higher but paperwork is reduced. If you've been using one small/medium bank for your Fannie/Freddie loans up until this point, it's worth asking for an informational meeting with their commercial loan officer.

[Dicey]

+1 to local banks.
- Ask realtors which banks are landlord friendly.
- You could try selective payoffs. Maximize your loans on some of your properties to pay off the smaller loans. Instead of having seven loans with 50% LTV, pull 75% mortgages on the three highest value properties and use the proceeds to pay off the smaller properties. Not sure if this is even legal. I'm not a CPA either, I'm just brainstorming a bit. I understand not wanting to pay off your properties, but if you can't get more loans, get creative.
- Private money.
- Ask on Bigger Pockets.

[KarefulKactus15]

Local bank portfolio loans.


It is worth your time to:

1.)  Find a reputable local bank where you have face to face access with a decision making loan officer / bank manager (both is better)
2.) Develop good relationship with these people.

Have these relationships built before you need to go above 10.  My local bank has informed me that, in theory, there isnt a cap on the amount of money they will loan for well performing investments.


Id dodge big multi state banks like the plague... utterly useless hassles for investors IMO.

[Fishindude]

I would strongly suggest working towards paying some of these off.   This provides a cushion in the event of a financial problem or downturn, and everything coming in from a paid off property goes into your pocket vs the banks.

[KarefulKactus15]

I would strongly suggest working towards paying some of these off.   This provides a cushion in the event of a financial problem or downturn, and everything coming in from a paid off property goes into your pocket vs the banks.

Im not sure I agree, depending on the OPs scaling goals.      But I would suggest that before going over 10, you purge your investments so you have only top performing candidates.   So maybe were saying the same thing?   BIG CUSHION, not sure paying off one property is the cushion I would suggest.

You dont want to go through something absurd like a 15% reduction in rents with 25 properties that negative cash flow with a 15% reduction in rents received.


****Updated**** I want to reflect the fact that I currently DO NOT have any real estate investments - My opinions are only opinions.

[clarkfan1979]

I would strongly suggest working towards paying some of these off.   This provides a cushion in the event of a financial problem or downturn, and everything coming in from a paid off property goes into your pocket vs the banks.

Im not sure I agree, depending on the OPs scaling goals.      But I would suggest that before going over 10, you purge your investments so you have only top performing candidates.   So maybe were saying the same thing?   BIG CUSHION, not sure paying off one property is the cushion I would suggest.

You dont want to go through something absurd like a 15% reduction in rents with 25 properties that negative cash flow with a 15% reduction in rents received.


****Updated**** I want to reflect the fact that I currently DO NOT have any real estate investments - My opinions are only opinions.

I have heard from many landlords that purging low performing rentals is common practice. However, that really never made sense to me. If I have to sell multiple underperforming rentals, I'm doing something wrong. Every rental that I purchase, I was to keep forever.

[Dicey]

I have heard from many landlords that purging low performing rentals is common practice. However, that really never made sense to me. If I have to sell multiple underperforming rentals, I'm doing something wrong. Every rental that I purchase, I wa[nt] to keep forever.

DH and I only buy houses we actually want to live in. Our rentals are all in the same community. We plan on moving into them one by one. We will complete a major rehab and then sell them off until there are none.