I own a property outright. I'm mortgaging it to buy another. I would like to repeat the process to build a portfolio. How do I proceed?

Asked by Lilly, Palmyra, NJ Wed Dec 15, 2010

I would ultimately like to buy in Fl. My first prospect is in NJ. How long will it take to refinance so that I can free up my capital for a Florida investment. Do mortgage companies frown on refinancing over and over to collect investment properties?

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rich and vir…, Home Seller, New Jersey
Thu Dec 16, 2010
If you take a home equity line of credit, you never have to close it. You just take the money when you are ready to buy, and pay it back when you sell, then take it again for the next investment. I have a client right now who does that. The nice thing is that with each purchase and sale there are, or should be, profits! So you can eventually, if you so desire, you just use the cash from your accumulated profits. I am really good at finding these properties, since I have worked with so many investors. Let's get in touch directly and do some business!
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Jerry Barker, Agent, Atlantic City, NJ
Thu Dec 16, 2010
I have done this already and what I did was use home equity lines of credit to do the trick instead of mortgages. I am very careful though as many have already said not to over leverage myself. I prefer using home equity loans because they are easier to qualify for and are less expensive, they usually dont have any closing costs associated with them.
Web Reference:  http://www.sjrates.com
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Marge Bennett, Agent, Fort Myers, FL
Wed Dec 15, 2010
please talk with a good financial advisor who can spell out the pros and cons of yourj proposition. You want to be sure you don't mess up any tax deducions both on your home and your new investment properties. If I can help you with your SW Florida purchases, please let me know.
Marge Bennett
RE/MAX Realty Group
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Mortgages By…, , California
Wed Dec 15, 2010
Hi Lilly,

That can be a good strategy, but take care not to overleverage yourself. If you're mortgaging a house to buy other houses, you're essentially borrowing your down payments. Overleveraging a property or a portfolio of properties can come back to bite you later if major expenses come up or market conditions in the community turn bad. If you are intent on cashing out equity to acquire other properties, I would make sure that you are buying those rentals well below the market and that you have a plan to force appreciation and rents so that you have a nice cashflow cushion for when things come up.

Best of luck to you!
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..., , Lexington, MA
Wed Dec 15, 2010
You got it right - a cash-out refinance wouldn't be allowed for some time after your purchase and you will be limited to the number of properties financed in some cases, although there are some ways to avoid that restriction. You might wish to consider conserving cash and financing the purchase, leaving money for a more immediate down payment after that transaction.

Good luck with your purchases! Let me know if I can be of help.

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Team Anders, Agent, Grand Rapids, MI
Wed Dec 15, 2010
If you go with a private bank that will hold your note at a "portfolio loan" it shouldn't take very long at all to obtain the financing for your next home. There are a good amount of factors that go into your personal ability to have the loan that loan officers can help with. As far as mortgaging your first home to buy a second, people do that all the time if you have the right factors (ie...credit, income, debt-to-income ratio) that make it favorable to the lenders. Good luck and I love Florida this time of year.
Web Reference:  http://www.teamanders.com/
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