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Updated almost 2 years ago on . Most recent reply
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Cash out options for 5th rental property?
Hi all,
I have been thinking about to cash out a rental property, but not sure how to start. (I am total newbie). The reason is that I want to POSSIBLELY(so I may not buy if no good deal) buy a new rental. Let's say I want to buy a rental with 200k.
I have another 5 rentals and one mortgage is all paid off a while back. I heard when it gets to 4 or more, banks will no longer loan on investment? I don't know if that is true.
So basically, the way that am I thinking is, I have enough equity from my primary and I am sure I can get a 200k HELOC as a second from my primary. The rate might be higher but I like it is flexible, and I can use it over and over again. So once I have this HELOC and if I do find a good deal in my range, I will use HELOC to buy it.
But the question is, after I used up my HELOC, how can I get cash out from this newly purchased rental, or if not, how can I get cash out from the rental that I already paid off? If I can get a cash out refinance on my 5th rental, use that to free up my HELOC, then I can re-use my HELOC to find my next deal and repeat, right?
Looking forward to hear some advices.., (I am in North Atlanta area).
Thanks you all.
Jenn
Most Popular Reply

Hey Jenn, great question! We help investors navigate this all the time! So the rule is typically 10 loans will disqualify you from further conventional lending in the investment space, however there are plenty of non conventional (called non conforming or NonQM) loans that will still do the trick! I personally have 2 (about to be 5 in the next couple of months when I finish some rehabs) NonQM loans and they are phenomenal 30 year fixed rate loans. I would be more than happy to talk through your options because it sounds like you have several.
Long story short: always try to get conventional financing first but when you run into the 10 loan limit or your DTI is maxed out, that is when you should pivot to NonQM or other options! (There's also a lot of benefit in NonQM if you are self employed).
Hope this helps!