Cashout ReFi options for 1st flip that is not selling

[Sean Youngberg]

I'm having quite the learning experience on my first "deal". Purchased an old SFH REO for rehab and flip. I used a portfolio lender that provided a "construction" loan with interest-only during the rehab which has now converted to a 3-year note with balloon.

The rehab ended up going way over budget, and over the amount of the construction loan. Most of this overage I'm now carrying on credit cards. I had a lot of the credit card debt on 0% promo rates which are now rolling off.

House is finished now and on the market, but its not getting a lot of traction for the current asking price.  What I want to do at this point is leverage the equity of the investment property to pay off my credit card debt. I've now accepted that I may need to hold this property for several months before finding the right buyer. Also starting to explore the market to rent the property instead. In either case, I need to get some cash out to pay off the cards.

Existing Commercial Note $148K

Estimated Value $260-270K

I would like to Cash out ReFi to around $210K or around 80% LTV. I thought this would be easy enough to convert to a conventional mortgage as my W2 income should be enough to qualify for that. But my portfolio lender is saying no-go on the conventional since it is an investment property. They are willing to work with me if I rent it and start generating some revenue from the property. I'm going to have another chat Monday to see about options, but was hoping the BP community could offer some advice.

The other crummy thing is my credit score is in the dumps due to the card utilization. My DTI with the current CC payments is at 44%. My wife's DTI much less.

[Jeff Dulla]

@Sean Youngberg The issue is that people, especially on here, generalize with terms like portfolio and don't fully understand what that means. Like portfolio is a magic term for doing anything Fannie/Freddie doesn't. Most portfolio loans that I know/use, mimic many of the underwriting guidelines that Fannie/Freddie follow. To a T. The lack of ability to sell a loan takes away a great deal of risk mitigation. So I wouldn't assume that they automatically go to a higher loan to value. 

Almost every portfolio  lender I know of will have the same guides unless you are going with a commercial loan or Non-Prime loan. And you would certainly know that because the loan structure and rates would be much different. 

I know many would not want to touch their primary residence but it comes down to cost of debt. If you have 10% you can tap in to (like you said above), maybe you cash out (depending on your current rate) or get a HELOC. That will help you get your loan to value down to 70% on the investment and should open many more avenues for you. A solid lender could do both in one fell swoop.