Accelerator: 4.1 Residential Rentals and Scaling

Accelerator
4.1 Residential Rentals and Scaling
Cheat Sheet

1. No Closing, No Cry

1. Not all offers go through, there will be some failed attempts. But what you must do is keep practicing and keep submitting offers. 
2. Lenders may reject your offer, sellers may back out, and that’s why having contingencies in place are crucial: 
   • Add an addendum to your contract requesting an extension in writing if more time is needed.
   • Add an amendment if you need additional credits at closing, or if the repairs completed by the seller weren’t done right. 
   • If you ever feel stuck, then reach out to us on the Facebook Group or join the Live Q&A Coaching Sessions.

2. First Closing

1. Once you close on your first property, stabilize it by:
   • Keeping it in good physical condition via repairs.
   • Keep good records of income, expenses, and documentation such as: rents, leases, and statement of accounts. 
   • Show a profit on tax returns to get approved for future mortgages.
2. Implement the 3 buckets system:
   • Save 3 – 6 months of living expenses.
     1. After you have 6 months of living expenses saved up, increase your savings by taking 30% of your gross revenue and set up automatic transfers from your checking account to your savings account.
     2. If your debt to credit ratio is above 30%, then take your increased savings and start paying down debt.
   • Delegate 10% to charity.
   • Delegate 10% to investing.
3. Once you’ve met your savings goal, reallocate money to savings for investing, repair your credit to a 640 or higher credit score, wait 3 – 6 months before doing another deal.

3. 2nd & 3rd Residential Closing

1. If interested in doing a multi-family deal, reach out to a mortgage broker on how to qualify for a commercial mortgage.
2. Keep a paper trail on all personal and business expenses by recording everything on a Schedule E
3. To qualify for additional residential mortgages, you’ll need a minimum of 640 credit score, and income from more than one source.  
4. You may be required to have 6 months of reserves for each property. 
5. The property needs to be in habitable condition.
6. Show lenders proof of funds:
   • Business income
   • Savings
   • Retirement accounts
   • If using business credit, it must be seasoned in the bank for at minimum 2 months
7. Before doing another deal, make sure the units you already have are:
   • Cash flowing $100 per door. 
   • 8% or higher cash on cash return.

4. Inventory

1. Markets tend to fluctuate, but you can still buy in any market conditions.
2. If you cannot afford to put down 20% on your next property purchase, then put down 3.5% instead.
3. Increase your marketing efforts by networking and focus on wholesaling.
4. If your market is limited to single family homes, then buy single family homes for your rental portfolio.

5. Scale

Join the Multi-unit Income Training (MIT) to acquire cash flowing multi-family properties in your local area or out of state.

Words of advice

• Keep it positive, be persistent, and be tenacious.
• Share your successes and issues with our closed Facebook group.

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