How Can I Pull Money Out Of My Homes

[Michael Glaser]

I purchased 4 SFH's in Kansas City in an off-market deal last week under my LLC. I bought my first rental property in April of 2016 under my own name.

My 4 SFH deal, my homes were purchased for $177,000. They appraised at $217,000, which makes my LTV 62%. The bank for my 4 will only loan out on the purchase price, which is 80%.

My first home bought in April sits at 72%. 

I have another house I'd like to scoop up, but I don't want to put more of my own cash in. 

Do I try and speak to my bank about my 62% LTV and my 30% Cash on Cash return I can get on this current deal I'd like to offer on?

Should I get a hard money loan to snag the deal? 

[Darren Eady]

Appraisals are a funny thing. The appraisal value is a guess of someone will pay for a home. Since you paid $177,000, the four homes are worth $177,000, not $217,000, at least, not right away. This is why the bank is giving you a hard time about using the appraisal value for a refinance within the first six month's to a year of ownership. I would sit tight and wait for bank financing rather than look for HML solutions to getting your money back out. Some banks do not have a seasoning rule to use the full value, so I would definitely check around for those local banks before waiting six months to a year.