where podcasts meet reality

[Stephen Sawrie]

so i now see the rub. have been researching this "smart leverage" method, aka BRRRR. makes all the sense in the world until you find out that my local banks have absolutely no appetite for anything beyond 10 year cash out refi. they will do 15 but will call it in 5 and either refinance at current (potentially higher) rate or just call it altogether. this is no big deal if you already were planning on putting in about 20%, but if you were trying to refi and recoup all your money it just ain't happening with a 10 note. furthermore, kiss cash flow goodbye.

i am sure i am missing something.  thoughts?  is the local banking similarly conservative in other markets?  what they tell me is that they wrote off a ton of bad debt on the overly leveraged SFHs in the past and simply don't have the stomach for it anymore.

[Kerry Baird]

I am currently doing a cash out refi on three investment properties.  You are talking with the wrong lender!  Unless it is an owner occupied house, where the situation is different, follow with me into the real world of Mortgage Sequencing.  

Houses 1-6 with 20% down.  My current rate is 4.875% on a 30 year fixed rate mortgage.  Six months reserves necessary on the property being refinanced.

Houses 7-10 with 25% down and a FICO of 720 or above, no cash outs allowed, and a slightly higher rate.  Reserves needed for all houses.

11 mortgages and up, start looking for portfolio or commercial loans.  Some look for the commercial loans well before this since the cost of appraisal and closing costs, plus paperwork are onerous in the conventional realm.  Some people (those who planned better than I did) get separate loans and ownership for each member in a couple, so 10 for him and 10 for her.