Re-fi trouble Refinance in Kansas City MO

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Re-fi trouble Refinance in Kansas City MO

Seth RouchPro Member
Specialist · Denver, CO · Member since 2015 · 85 posts · 29 votes

Hi Everyone,

Last year I purchased a turnkey condo as a rental in Kansas City, Missouri. (I live in Colorado.)  The BRRR @Brandon Turner talks about on pod casts ... well I'm having trouble with last 2 "RR".  It's been a year now. Title is seasoned etc, tenant in place, cash flowing well, and I have tried 10 banks, large and small, in Kansas City to try to re-fi this property. Some references from my current Hard Money Loan and some from my agent in KC. I'm being told "you're out of state",  "the condo is 'not warrantable'", "you don't have enough assets" (which didn't make sense as I own another KC property outright worth over $100k and condo is only worth about $65k, in addition 3 houses in colorado with %20 equity or more, not to mention others etc...)  Anyway, I wanted to reach out and see if anyone has run into this same thing before. It's been quite frustrating and having $ tied up that I would like to re-invest is irritating to say the least. 

I'm open to suggestions and connections.

Thanks in advance!

P.S. Yes, I tagged you in this Brandon just to see if you read it.  ; )  haha  

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Shaun Weekes
Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
10y

@Seth Rouch

I picked up on 3 things in your post.

Out of state (this doesn't matter)

Assets (I will get deeper into this for you)

Non Warrantable (This is when the HOA or all the units are 50% or more rentals)

The rule for assets just changed on July 26th and instead of requiring 6 months of reserves for all investment mortgage payments. (say all your Investment Property payments total 1K... You’ll need 6K in reserves) Now you just need a percentage of your total loan amounts.

Example:

If you owe 500k in loans and you own 7 to 10 homes, you need 6% for reserves or 30K

5 thru 7 is 4% = 20K

1 thru 4 is 2% = 10K

And you need to show liquid assets like money in the bank, 401K, Stocks, Bonds Etc.

Your biggest issue is going to be the non-warrantable issue. If the H.O.A. is truly 50% or more renters, then you'll have to get a portfolio loan. This will be a loan that isn't sold to Fannie or Freddie.

You need to contact your H.O.A. and ask them if this is the case. They might charge you for this information but it's crucial if you want to Refinance.

I hope this helps and have a great day Sir.

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  • Bill Hamilton
    Denver, CO · Member since 2015 · 251 posts · 123 votes
    10y

    You probably need to find a good mortgage broker who is licensed in MO. You might also want to give some more details about the refi. But potentially, one of your biggest problems might be the size of the loan. If the condo is only worth $65k at a 75% cash out (which is probably the highest LTV you can get on a NOO cash out refi) then your loan amount is less than $50k. Many banks and mortgage companies have minimum loan limits that are higher than that amount, Also many brokers or LO's don't want to work on loans that size. The amount of work is the same as doing a $300k loan but the amount they are compensated is far less. Add in any problems with the loan i.e. non-warrantable condo etc., then it often becomes not worthwhile for them to try and make it work.

    Also, in terms of them saying you don't have enough assets, for a conforming loan they are referring to liquid assets. A free and clear home to them is meaningless. They won't accept your F&C home as collateral (portfolio/private lenders often will) but are rather looking for cash, 401k's, CD's etc. as they want things you can use pretty much instantly to pay the mortgage payment if you run into cash flow problems. You might see if you can pull cash out of the free and clear property instead. Especially if it is an SFR.

    0Reply
  • Shaun Weekes
    Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
    10y

    @Seth Rouch

    I picked up on 3 things in your post.

    Out of state (this doesn't matter)

    Assets (I will get deeper into this for you)

    Non Warrantable (This is when the HOA or all the units are 50% or more rentals)

    The rule for assets just changed on July 26th and instead of requiring 6 months of reserves for all investment mortgage payments. (say all your Investment Property payments total 1K... You’ll need 6K in reserves) Now you just need a percentage of your total loan amounts.

    Example:

    If you owe 500k in loans and you own 7 to 10 homes, you need 6% for reserves or 30K

    5 thru 7 is 4% = 20K

    1 thru 4 is 2% = 10K

    And you need to show liquid assets like money in the bank, 401K, Stocks, Bonds Etc.

    Your biggest issue is going to be the non-warrantable issue. If the H.O.A. is truly 50% or more renters, then you'll have to get a portfolio loan. This will be a loan that isn't sold to Fannie or Freddie.

    You need to contact your H.O.A. and ask them if this is the case. They might charge you for this information but it's crucial if you want to Refinance.

    I hope this helps and have a great day Sir.

    2Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    10y

    Try Bank 21 in Blue Springs.

    Podcast Guest on Show #121
    0Reply
  • Seth RouchPro Member
    OP
    Specialist · Denver, CO · Member since 2015 · 85 posts · 29 votes
    10y
    This is definitely great info. Thanks. I've also tried to go the route of a HELOC and am getting the same responses. I'll try bank 21 in Independence as recommended. I know from other local lenders that my liquid assets shouldn't be an issue. In fact the lenders I've talked to locally are baffled, as am I, though I understand that it's a small loan I also realize that in that market it's an amount loaned fairly often. I'm not sure why purchasing outright then refinancing is proving more difficult than if I simply started with a loan initially. Please continue to feel free to post. I'm open to any and all ideas. Thanks again! : )
    0Reply
  • Eric P.
    New York City, NY · Member since 2016 · 470 posts · 348 votes
    10y

    @Seth Rouch I'm gonna ask a really dumb Q: have you asked the lenders to ask their underwriters what the issue is? This process isn't supposed to be a giant mystery - if lenders / underwriters are rejecting you for a specific reason, you should be able to ask them what that reason is. I've found the local lenders in KC to be quite helpful & frankly am shocked you can't get someone to give you a straight answer on this.

    0Reply
  • Seth RouchPro Member
    OP
    Specialist · Denver, CO · Member since 2015 · 85 posts · 29 votes
    10y
    Thanks Eric P. I've asked and the answers are - "out of state", "don't lend in investment property/non owner occupied", "non-warrantable condo". I am baffled. My local lenders are also baffled. It's seems cursed almost at this point and I've taken quite a dent in my credit score to apply with 10 different banks. Bank21 was actually the first bank I tried as a reference from my real estate agent in KC. Still waiting to hear back from 2 more, but things are looking grim. My last resort would be to simply sell, take a loss, and move on, but if eater not if I can avoid it.
    0Reply
  • Eric P.
    New York City, NY · Member since 2016 · 470 posts · 348 votes
    10y

    @Seth Rouch And you're talking to the "good" local banks that people recommend? There's a few threads on good local banks. Here's one

    https://www.biggerpockets.com/forums/432/topics/34...

    These banks all lend on investment properties with out of state owners so those 2 things wont be an issue. I can't speak for the condo thing

    0Reply
  • Michael H.
    Investor · Kansas City, MO · Member since 2016 · 130 posts · 64 votes
    10y
    I'm sorry but I didn't read the entire thread so I'm sorry if someone else mentioned it. Could you get a HELOC on the $100k and have it available to pay the hard money lender? Try Rob Morgan at Lead Bank. PM me for his contact # if you like.
    0Reply
  • Seth RouchPro Member
    OP
    Specialist · Denver, CO · Member since 2015 · 85 posts · 29 votes
    10y

    Thanks for the info and help everyone. I've finally found a bank NBKC  who is willing to work with us. Not the best rates, but I'll at least be able to re-invest. I also found that I could possible use it as leverage/asset towards a commercial loan for a multifamily. I appreciate your help! 

    0Reply
  • Chris L.
    Lender · Hunt Valley, MD · Member since 2016 · 83 posts · 30 votes
    10y

    Hello Seth,

    I would like the opportunity to find out more about the properties. I may have some options for you. Please PM me if you would like to discuss further.

    Cheers!

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