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    Home Unlabelled Real Estate Investing: I've Made $550k in 16 Months! (Trailer Park Tale, Chapter 3)

    Real Estate Investing: I've Made $550k in 16 Months! (Trailer Park Tale, Chapter 3)

    March 08, 2021

    Real Estate Investing: I've Made $550k in 16 Months! (Trailer Park Tale, Chapter 3)

    I've Made $550k in 16 Months! (Trailer Park Tale, Chapter 3)

    Posted: 07 Mar 2021 12:50 PM PST

    In honor of r/realestateinvesting hitting 500k members, let me share how I've made over $500k in the last 16 months (also coincidentally almost how long I've been a member of this sub, not that those are correlated facts, or are they?)

    ​

    • Chapter 1: Wherein I detailed the purchase, and Pre-Covid Numbers on my Mobile Home Park.
    • Chapter 2: Wherein I detailed how we were generating Non-Capitalized income by seller financing the mobile homes that came with our purchase.
    • Chapter 3: Where we are now.

    This last week we got our appraisal back from the appraiser and are now waiting for our Lender to fund the loan.

    The Grand Appraisal value: $1.3M.

    Original purchase of $750k (and only 167k of my own money into the project)

    ROI: 329% (Not including Tax Benefits)

    ​

    Market Value Conclusions "As Is"
    Cost Approach N/A
    Sales Comparison Approach $1,090,000
    Income Approach: $1,350,000
    Land $95,000\*
    Final Value Conclusion $1,300,000

    \(Remember the Land number, we'll get back to it))

    Our Economic Occupancy has gone from 26% to 30% That means we've netted about 7 new paying residents since we purchased. Not very impressive. But when we consider that fact that our turn-over rate is almost 50% we've added 37 new names to our Rent Rolls, Survived Covid-19 with 85% of our residents paying. But and this is the key and how we are going to be ahead on stage 2 of our value add journey but we've now got 17 Almost Ready to be occupied Units.

    Where are our numbers at:

    ​

    2019 (2.5 Months) 2019 (annualized) Thru June 2020 2020 YE
    Income
    - Application Fees $390 $1,872 $2,015 $2,795
    - Utility Connection Fees $450 $2,160 $650 $950
    - 3rd Party Electric $447 $2,146 $13,697 $31,588
    - Late Fees $230 $1,104 $900 $2,430
    - Cash Home Sale $2,550
    - Lot Rent $31,343 $150,446 $103,677 $213,867
    - Misc Inc $656 $3,149 $1,998 $3,894
    - Pet Fees $167 $802 $1,183 $2,438
    - RTO Payments $1,100 $5,280 $9,950 $24,975
    - 3rd Party Water $1,325 $6,360 $13,017 $31,420
    = Gross Income $40,393 $193,886 $140,844(2) $310,754(2)
    Expenses
    - Bank Fees $153 $734 $302 $327
    - Car & Truck $1,095 $5,256 $445 $1,579
    - Contractors $0 $51,757 $0 (3)
    - Dues & Memberships $100 $100(1) $499 $499
    - Insurance $2035 $2035(1) $2,366 $5,740
    - Interest $13,164 $63,187 $40,809 $77,009
    - Legal Fees $1,258 $6,038 $4,240 $5,140
    - Meals $320 $320(1) $150 $150
    - Office Labor $3,594 $17,251 (re-categorized) $18,667
    - Office Supply/Software $863 $4,142 $5,410 $10,133
    - Background Check $390 $1,872 $1,515 $2,134
    - Security $179 $859 (re-categorized) (re-categorized)
    - Property Tax $10,615 $10,615 $19,732
    - Home Purchases $600 $600(1)
    - R&M $706 $3,389 $5,410 $14,053
    -R&M Labor $11,892 $57,082 (re-categorized) $23,113
    - Trash $620 $2,976 $2,245 $5,849
    - Electric $2,586 $12,413 $23,711 $51,747
    - Water $10,268 $49,286 $20,128 $43,802
    - Gas $4,878 $5,533
    = OP EX $60,434 $238,155 $166,826 $288,783
    NOI $-20,023 $-44,269 $-25,982 $21,971
    Amort $2,292 2292(1) Not Factored Yet
    Depreciation $135,506 135,506(1) Not Factored Yet
    CapEx Spend $14,490 14,490(1) $52,266 $115,514
    Net Income $-172,311 $-196,557 $-78,248 -$93,542
    1. Not an annualizable cost
    2. There's a miscategorized $6,255 purchase in there, for all you math nerds
    3. Re-Categorized properly
    4. Math won't all add up as there were some changes, and small expense not recorded here

    ​

    EDUCATION NOTES:

    Operating Cap Rate = NOI/Valuation. $21,971/$1,300,000 = 1.7%, wouldn't that be swell? But we need to remember to add our Mortgage Payments, in this case our Interest Only Payments back to our NOI: $98,980 / $1.3M = 7.6%

    Where did our true value come from? Definitely not adding 7 Paying Residents. If that was the case, this property would be worth $50M and that would just be silly. Our value came from the fact that we are valued at the Market Cap Rate of 7.6% instead of what we purchased at a 16% Cap.

    Here's the great thing about the appraisal, other than the valuation. It valued the cost of our land at 1/4th what the tax appraisal currently values the land. If we can win in our scheduled Tax Assessment case this week we could add ~15k in NOI, or about $200k in valuation. (Told you we would get back the land!)

    Stage 2 of our Value Add: is to get our Rented Unit Count up to 90 which would bring our vacancy rate to 50%. We've got 17 Almost Ready to rent because of Tenant Turn Over, and we've still got another 20 of our low hanging (easy to rehab) units to get rented up.

    What does that do to our valuation? (Assume all other number remain unchanged)

    ​

    Gross Rent $356,400
    - Op Ex $288,783
    = NOI $144,626
    / .076 (cap rate) $1.9M

    The expenses won't stay they same and they won't be linear either, so it's vague number, without all the math, but in reality we expect it be closer to $2.1M and to take less than 6 Months.

    Our Astute Readers will realize that we have a huge cost/income imbalance in our charged vs collected utilities. Currently:

    ​

    Expense Income Delta
    Water $43,802 $31,420 -$12,382
    Electric $51,747 $31,588 -$20,159
    Trash $5,849 $0 -$5,849
    -$38,390

    At a 7.6 Cap this $38,390 inefficiency is $505,132 in lost equity. Using some easy math we can see that we are losing about $640/yr per resident on these expense at 90 residents we expect that loss to be $57,600/yr and actually worth $750k in lost valuation.

    Guess what Stage 3 is projected to be? We will be rebuilding our utilities at a cost of $250k to gain another $750k in valuation. We expect to be starting the utility upgrades this summer.

    Wrap-up.

    When we get finished with Stage 3, and before transitioning to Stage 4 we expect our valuation to be upwards of $3M. And none of this takes into the account that in the first 16 we've got almost 400k in tax losses. Which because I'm a Real Estate Professional, is and has been an enormous benefit against the rest of my income.

    submitted by /u/LordAshon
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    Tips & Tricks on Managing Your Property Manager

    Posted: 07 Mar 2021 05:07 PM PST

    I'd love to get a thread started on various strategies people have used to best manage their property managers ("PM").

    I have been an (out of state) real estate investor for the past 18 years and I currently own 29 properties (53 doors) in 4 states (IN, WI, TX, NM). Most of my properties are SFRs or duplexes in WI and IN.

    I have had some good experiences and some not so good experiences with property managers. Regardless, I have come to understand (and appreciate) that the property manager is one of the MOST critical parts of your team when it comes to investing in real estate.

    I'd love to hear how other folks have best managed their property mangers. Here are some of the questions on my mind. If you could answer some or all of these questions, that would be great. From my own personal experience, I have put my answers in bold.

    1. Are you generally happy with your PM? For now, I'm fairly happy. I had to replace my PM in WI in June '20 and replace my PM in IN in Dec '20. The old WI PM was terrible at communication. It would take repeated calls and emails to get responses on my properties. They also did not do a great job keeping my properties filled. My new WI PM has been really good so far. All of my properties are filled and he is incredibly responsive. My old PM in IN also didn't communicate great, but they also put very bad tenants in my properties so there were several evictions. The new PM in IN is still new, but so far so good. My PM is TX is absolutely GREAT. They keep my properties filled, raise rents like clockwork and are very responsive. I wish I could purchase more properties in TX, but I can't find any more good deals that cash flow. My PM in NM only has one property to manage and they do a decent job.
    2. How many doors does your PM manage? I'm trying to see if most people use small, medium or large PMs. Most of my PMs manage at least 500 doors. My PM in TX manages over several thousand doors in several states. I tend to look for the larger PMs because they tend to use the most advanced tech and I want to make sure they will be around for a while.
    3. If you had to previously replace your PM, why did you replace them? Reasons stated above in #1
    4. What does your PM do that is really exceptional? My WI PM does a really good job of creating lists of anybody that has applied for any of their units and re-markets to them with new vacancies. My WI PM also does inspections 2x/year and sends me a report that shows the must have repairs and the ones that can wait
    5. What systems do you have in place to communicate with your PM? I talk to my WI and IN every two weeks. We have a standing 30 min Zoom call. The set agenda includes: vacancies, repairs and delinquent rents. If there are any issues in between the calls we just email or text.
    6. How often do you review your property management statements? What are you looking for? I review my statements each month and I primarily look for large expenses and any rents that are late. I also try to confirm any rent raises with what the PM has said
    7. What expenses do you have your PM pay? Insurance? Property taxes? In addition to the normal repairs & maintenance and utility bills, I have my PMs pay my property taxes. Instead of it coming out as a lump sum 2x/year, I have then take out 1/12th each month as sort of an "escrow" then pay the property tax bill out of those funds so it is smoother. This is done on my properties that don't have a mortgage that can do the insurance and prop. tax escrow.
    8. How do you verify that the maintenance & repairs are legit? This one is tough. I have a contractor in IN I really trust that does most of my repairs. I have him work with my PM. For my PM in WI, I don't have any mechanism like that. For the larger repairs (like a furnace) I make sure I get at least 2 bids and I talk to the company myself before the repair is done.
    9. What are your property mgmt fees (including leasing fees, utility pmt fees, etc.) ? In WI, I pay a flat rate of 7%. There are no additional fees for new leases or lease renewals. In IN, I pay a flat $50/unit mgmt fee, 50% of rent for new leases (if a new tenant leaves within 9 mos, the lease fee is refunded), $125 for lease renewals, $5/property for utility payment. In TX, 7% mgmt fee, 87% of rent for new leases, no charge for lease renewals. In NM, I'm paying 9.6% mgmt fee, 50% of rent for new leases, $70 lease renewal fee.
    10. Do you review each applicant or leave that entirely to your PM? I usually don't, but for the old PM in IN, I had to start doing this because they were placing bad tenants in my property. Now with the new PM in IN, I don't do this (nor for any of the other PMs)
    11. What system, software or platform do you use to review your real estate income & expenses from your PM statement? I use Stessa.com to ingest all of my real estate transactions from my PMs and my bank account. This is a great tool. It is like Mint or Quicken but for real estate. It is also free. For the PMs that I can't link into Stessa, I just upload my transactions from a .CSV file that I have my PM send to me each month. This platform allows me to run reports and see which properties are under performing so I can course correct.
    12. How often does your PM do property inspections? My PM in WI is the best at this. They do pro-active inspections 2x/year. All of the PMs do move out inspections and will send me pics before the rent ready repairs are done and after they are completed.
    13. What threshold have you set for repairs that need your approval? I have set the threshold at $400
    14. What has been your average vacancy? This has been the hardest number to really calculate, but I would say TX and NM have been b/t 90-100% occupied. WI has been 90%-95% occupied with the new PM. And IN has been the hardest one to keep all the units occupied so it is closer to 85% occupied
    15. Are there certain strategies you use on your turnovers or renovations to make it as cost effective as possible? I tend to use carpet tiles instead of laminate or faux hardwood floors. The tenants get the plush feel of carpet, but it is really easy to maintain.
    submitted by /u/ESI192
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    Please reality check a first time buyer (MFH)

    Posted: 07 Mar 2021 02:58 PM PST

    An opportunity fell into my lap that I jumped on, I just want to make sure my thinking is rational and that I'm not overlooking anything huge as a first time buyer.

    I'm under contract for a 375k 3 unit home, 20% down, 300k mortgage at 2.75% puts me at ~$2,300/month with taxes but before insurance. I make 75K and my take home would put me ~$1,100 over covering the mortgage for any duration of time where there is no rental income, which feels like it may be a little tight. I do have 20k in reserve should I need to dip into it to cover larger repairs while rebuilding savings.

    It's an old home with a ton of charm in an area just outside of one of the more desirable cities near me, close to universities, hospitals, etc. Each unit is currently occupied with a month to month agreement.

    Unit1 currently rents for $1,700 (I currently live here)

    Unit2 currently rents for $1,500

    Unit3 currently rents for $1,200

    This will continue to be my primary residence. I've lived in the main house for the past 2 years. Units are occupied and rent ready, one unit could just use a kitchen refresh. Current owners love the home and have had it for 40 years, any work was seemingly done the right way when it needed to be done from my experience of living here.

    This will be my first step into real estate and I guess I'm hoping for any insight from those of you who have been here before who also felt like they were diving into the unknown. Obviously the time with tenants will be ideal with them covering the mortgage but am I cutting it too close with my income should anything come up in a situation where I couldn't have tenants for any extended period of time or if larger repairs decided to stack up? Does this check out as a solid buy for me?

    submitted by /u/internetfacade
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    Landlords dealing with tenants who are not paying rent and are protected by the eviction moratorium, what are you planning to do to receive the rent eventually?

    Posted: 07 Mar 2021 05:58 PM PST

    I live in Washington State and the previous tenant didn't pay rent. I'm planning on pushing this forward to the small courts claim, but I don't know what to expect. What were your experiences at the small courts claim if you have any? And what other steps did you take?

    submitted by /u/asswipes2000
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    Did I hit the jackpot?! Advice please!!

    Posted: 07 Mar 2021 06:57 AM PST

    I signed a 3 year lease in starting May 1, 2017, which technically ended April 30, 2020, smack in the middle of our shutdown for covid (Iowa). The landlord said I had to continue paying rent while we were shutdown, I did ask two times for assistance, each time I was told to get the PPP. I got pissed and tried to find another building but the space we have, almost 14k square feet at 4500/month, there was nothing even remotely close. We are also located in a commercial area next to Walmart, restaurants, grocery store, shopping, etc. Until this point, he's been amazing. Has loved what we do for the kids and community. So at least I know he's not a complete tool.

    Long story short, things are pretty much back to normal, we are filled at over 90% of enrollment and trying to keep up with the demand.

    This is the interesting part...I contacted the landlord to ask about purchasing the property. I did this about a year and a half ago as well. He told me he had the property appraised and the asking price was 1.2 million. Over the last couple weeks I brought in several contractors to get a bid on replacing the HVAC system, replacing sliding doors that don't work consistently and a small remodel that I would like to be done along with a few other smaller issues. About $75k total on the high end.

    My appraisal guy came back with $1.075 million. So $125k less. I talked to the bank about financing if I could get it at the $1.075m. I received an option of: *10% down *Bank finance 50% at 3.5% 5/1 ARM, 20 year amortization *SBA finance 40% at 2.5%, locked in at 20 year Payments would be less than 4500.

    Cut to Wednesday night when I'm talking with the landlord...he's willing to work off of the $1.075m. So I figure 50-75k off to do the few fixes, so essentially a million dollar loan. He says, "let's just do 200 payments at $5k a month until it's paid off, no early penalty prepay."

    So my understanding of this is, I'm getting an interest free loan of a million dollars for this building. Every payment I make is pure equity. Am I right about this? I told the bank this and she was stunned.

    Anything I should be looking out for?! Anything I need to ask a business attorney about or have in a contract?

    He is a doctor in his late 50s and owns a good amount of property. Some of the corporations that rent his land or space are Sam's Club, Perkins, Abbadent Dental, a car dealership...so he's not going broke anytime soon.

    I'll answer any questions if you need more information.

    submitted by /u/theslutsonthisboard
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    Bay Area, post COVID, duplex, bankrate calculator.... wTF am I not getting it?

    Posted: 08 Mar 2021 01:59 AM PST

    I'm a noob. Like ELI5 level, so bear with me.

    I went to bankrate.com and calculated a duplex purchase in a California SF area zip code. It's obviously a HCOL area so I put in a $1m property, duplex, first time buyer, great FICO, 5% down And it quoted me $3,500 mortgage.

    Fun fact: a rental in the area is easily $3,000 or so, meaning i could realistically have that much income from the second unit.

    Taxes I think are about 1.2% or something, right? So.... about $1k a month?

    Is this what's actually happening? Am I throwing away money renting when I could basically own the place and pay less in mortgage and taxes?

    I'd like to hear genuine hard core realistic feedback from folks who have experience in this crazy expensive Bay Area rental market, but haven't locked in 10 years of appreciation already.

    I keep thinking COVID fallout in the coming years is going to put pressure on the local rental market.

    submitted by /u/Tossmeanewone
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    How best to invest $1-2 million in Northwest Florida.

    Posted: 07 Mar 2021 06:08 PM PST

    I have 1-2 million to invest in Real Estate. Would like to find some assets that reliably generate rental income without requiring much of my time for maintenance, management, etc. Was originally thinking Condo's might be good option, especially since NW Florida tends to get hit by hurricanes frequently and Condo's seem to be more durable. Thoughts?

    submitted by /u/alphadog300
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    Buying a Property at Auction Help

    Posted: 07 Mar 2021 06:45 PM PST

    Hey guys,

    I'm a college senior and I've been trying to house hack to get into real estate for months. A 2 unit popped up on my radar yesterday and I have to bid on it at an auction on March 12th. My real estate agent and I are going to look at the property tomorrow to see how much we should bid. Is there anything I should look out for tomorrow? or any questions I should ask my agent?

    I'm nervous af because I know this property has the potential to change my life and start me on my real estate journey. My family never owned any real estate or any other assets. So getting this first property will mean a lot to me, to show my family it's possible. I'm trying to take the emotion out of getting my first deal but it's hard..

    submitted by /u/ogjuannnn
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    I need some advice, first time investor looking to pay for college.

    Posted: 07 Mar 2021 07:19 AM PST

    I am planning on attending university next year, it is between 2 schools I'm growing cities. I did a little research and decided that if I were to rent or live on campus I would pay about 40k in room and board. Yikes. So I did a little bit of research and found some fairly nice homes for sale. About 300k relatively close to the university in a good area. Right now I have about 20k saved up and I am considering buying the house and financing it so that I am paying about 1700 in utilities mortgage and other housing expenses. I believe I could live in this house and rent it out while I attend to school to cover my living expenses. It is a 3 bedroom house so 3 people could live in it quite comfortably. One bedroom apartments rent out for 1k-1.2k in this city. So I believe that with a parent co-signed on the mortgage and rent from 2-3 other people I can cover my living expenses and build equity. Please tear my plan apart so that I can prepare to actually do well.

    submitted by /u/DanthaHam
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    Non permitted add-on? Risk?

    Posted: 07 Mar 2021 08:52 PM PST

    I found this amazing investment property and buried in the paperwork is a clause that I am aware the bedroom* is not a permitted or up to code add on. That I waive my rights to recourse blah blah blah. It's specific to this bedroom so it's not some generic hold harmless crap. (Haven't paid Escrow, not under contract on it)

    It's an old home. Charming family who owns and occupies it. They state they did not know. (... why is it in there?) when showing the home they had it set up as an entertainment room of sorts. Dart board, billiards and such. MLS shows it as a "2bd/2ba + den".

    What are my next steps to my route forward?

    -I can walk away. (most likely decision) -I can demand seller(if I go forward and accepted) make repairs or credit to bring it to code + permit -I can completely ignore either option, sign and buy it..

    The above mentioned options are in my current order of preference. My question is- (if I buy) I'm going to rent this home out. What risk do I open myself to by doing so? Can I legally even do this?

    If I am go buy it, what must I do to bring this add on up to code? I'm in Northern California and it's a 2bd/2bath home.

    submitted by /u/SANMAN0927
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    How to make an appealing offer to sellers before they publicly list property?

    Posted: 07 Mar 2021 09:52 AM PST

    If you were gearing up to sell a property, what would incentivize you to negotiate prior to listing?

    And similarly, if you were to attempt to make an offer, how would you try to sweeten the deal?

    I'd like to make an offer on a property that I know will be coming up for sale soon. While I would like to try to do this without agents (so as to save them commission), I don't know how to sweeten the deal while also not burying myself by waiving all contingencies.

    submitted by /u/rizzo1717
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    First time buyer

    Posted: 07 Mar 2021 04:52 PM PST

    Single family home 3 bd 2 bath Good locality and 9 school rating (all level schools ) Asking price 320k

    Real question: I'm thinking to get in this property for rental investment. I'm a first time buyer. How to go about this?

    Is this a good idea?

    Any suggestions or advice much appreciated.

    submitted by /u/2020techdwr
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    Crack above my bathroom door

    Posted: 07 Mar 2021 12:18 PM PST

    I bought my house almost a year ago and there was a small crack running vertically above the master bathroom.

    I didn't use the bathroom because the shower was small but after renting out the other two rooms I started using the shower. The crack has now gotten bigger to the point where the door doesnt close. I'm not sure if it's due to moisture or foundation issues, my contractor doesn't think it's moisture.

    The house does not have foundation you can see from the outside and I looked in the crawl space there's wood boards that are on supports.

    Should I be concerned? Do I call out a foundation company to look?

    submitted by /u/Hdhfhgdhfjbghh
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    Painting interior doors in a seller's market

    Posted: 07 Mar 2021 03:39 PM PST

    Planning on selling one of my properties and I am in an incredibly hot seller's market. I am replacing old flooring and countertops, fixtures, etc. But is it worthwhile on ROI to paint the flat panel wood doors?

    submitted by /u/onesmallserving
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    Vacation rental investments

    Posted: 07 Mar 2021 04:07 AM PST

    I hear that profit margins are higher but also more risky due to potential vacancy. Can someone recommend a good book that can educate me on short term rentals.

    submitted by /u/Tenesmus83
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    Rental properties are just breaking even, what should I do?

    Posted: 07 Mar 2021 07:03 AM PST

    I am a small-time/beginner RE investor started two years ago, and I currently have two properties. The cash flow on those properties aren't great, but I am breaking even. Because they are long term tenants and relatively worry-free, so I kept the rent pretty consistent. And now especially during Covid; I actually lowered the rent slightly.

    My question is, should I keep holding onto those two properties, and keep building up equities/value appreciation, or should I sell the properties, and find another house that will produce more cash flow? Below are some details:

    Townhouse 1 - purchased at 175k, now valued at 210k and still owe about 150k on it. Townhouse 2 - purchased at 260k, now valued at 280k and still owe about 210k on it.

    Edits: thanks for all the replies. Here's a little more detail - both properties are in the south.

    Townhouse 1 - initially paid 10% down, mortgage, escrow and HOA add up to roughy 1200, currently renting for 1300. Market rate is maybe 1400 to 1500.

    Townhouse 2 - initially paid 20% down, mortgage, escrow and HOA add up to roughly 1500, currently renting for 1700, market rate is maybe 1800.

    submitted by /u/bbww128
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    Single Family rental home

    Posted: 07 Mar 2021 11:39 AM PST

    My family has a rental property that's been in the family for decades. The rent isn't much, and the upkeep is becoming a hassle for my parents.

    I know nothing about real estate investing. I'm considering taking control of the property, but wanted to see if it's a good idea to use a property management company that will handle finding renters and upkeep.

    Any thoughts?

    submitted by /u/Draft_Punk
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    HELOC for second home?

    Posted: 07 Mar 2021 11:05 AM PST

    My wife has a second home with the mortgage under her name. Her parents have been living in the home since it was purchased in 2012, so there is a considerable amount of equity in the property.

    Hoping you all can provide some lenders that are willing to open a HELOC for this 2nd property?

    Some additional info that may be helpful: 1. We already have another HELOC open on a separate property that used to be our primary residence (which we have converted into a rental). 2. We are located in the Bay Area, CA.

    Thanks in advance!

    submitted by /u/osi12is
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    So, is this time to buy or not?

    Posted: 07 Mar 2021 08:50 AM PST

    With access to capital of >$100k, I am determined to put it to work in real estate. I pulled out of a multi family deal following the inspection—I would have been overpaying considerably. I'm sure they will get someone to over pay soon enough.

    So, how do you invest in real estate in 2021 without over paying?

    submitted by /u/OnlyDode
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    Feeling Defeated

    Posted: 07 Mar 2021 07:54 AM PST

    Hey guys, so I'm a 21M wanting to get into real estate investing. I had set the time frame for the end of 2022 when I'd be able to eliminate all debt, have a good enough down payment & be making enough to qualify for a good amount.... only thing is, my plan didn't include a pandemic that would skyrocket house prices. I feel as though trying to get ahold of real estate will only get more & more difficult as time goes on. So my question is, do I see if I can qualify for a cheaper home/condo now while I might be able to? Or do I stick to the script and risk being priced out of anything completely with my original time frame?

    submitted by /u/HopeDisastrous3668
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    Need help financing small single family portfolio.

    Posted: 07 Mar 2021 05:38 AM PST

    So my wife and I started building our single family portfolio with 2 rental townhomes. We paid in cash for each but I cannot help thinking how much better our returns would be (cash-on-cash & appreciation) if we got a little leverage to buy some more. The problem is we don't make enough money to prove we can service all these mortgages alone. That is, as I understand it, if we carry 3 mortgages, we have to prove we can service all 3 right? Or not? I'm familiar with a lot of commercial lending programs but lots of them have prepay penalties and high rates. I'd much rather put 20% to quality for a Fannie loan at a very low rate. What do we do here to acquire a little leverage?

    submitted by /u/Jstef06
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