Updated almost 10 years ago on . Most recent reply
Cash out refinance with 8 mortgages
I am looking for better ways to come up with down payments on buy and hold investments. I live, work and invest in the Rochester, NY area and self manage. I currently have 6 MF properties and carry 8 mortgages including my own primary with an HELOC on it. I use the HELOC to get through times when I need fast cash for repairs and closing costs. All my properties cash flow and once I replenish cash I buy again. I have been using my own funds for the down payments. All are conventional loans, most at 4.5% apr and less. I've been putting down 30-35% due to the bank rules. Banks say I am unable to do more cash out refi's due to the number of mortgages (More than 4). I have one property with decent equity with an apr of 5.8% and 7 years left on the loan. I'd like to tap that equity. I don't want to sell it, but it's an option. It's a good property but not my best in terms of cash flow. I am depleting my own funds quickly and would like to grow faster. I understand when using my own funds that this is what happens. I'm searching for ideas on ways to buy more properties by coming up with lower down payments faster or dealing with alternate financing methods. I prefer class B properties which usually require clean deals.
Most Popular Reply
@Account Closed -
- By my count you have 7 financed properties (we don't count # of mortgages, we count # of financed properties regardless of what the financing is... 3 mortgages on one property would count as 1 financed property).
- 6 is the max number of financed properties you can have, and still do cash out, using Freddie Mac. (The person that told you 4 is quoting Fannie's rule, maybe they are a Fannie-only lender, or maybe they didn't read the Freddie guideline change that came out like 8 freaking months ago and rely on water cooler talk for their "information"...)
- Of your 7 financed properties, are any of them "commercial" and not "residential"? For example anything 5+ units is commercial and does not need to be counted here.
- If that route isn't available, is there any way that one could be paid off as part of the cash out refinance, and still net you the down payment money you want?
- Example of above: Suppose two of your financed properties are worth $500k but only have $50k mortgages on them each. If we cashed out one to the max, paid off the other's mortgage in full through escrow, you would as of the moment the new loan funds have 6 financed properties AND get a bunch of cash at the end of the transaction AND we just delayed you hitting that 10 financed properties hard cap AND you owe me a beer.
Alternative to the above: portfolio lenders, commercial lenders, hard money lenders.... with rates/terms getting crappier and crappier as my list progresses.