Having problems with a refi of a townhouse rental property

[Trent Dang]

I have a 7/1 ARM with a balloon payment of approx. $100K due 02/19 for an rental/townhouse in MS. Current value is approx. $130K.

I would like to refinance this loan into a more traditional loan so as to get out from underneath the impending balloon payment and hopefully lower my current interest rate of 6.5%. My current lender only offered to place the loan into another ARM and four other traditional banks have denied me altogether because our HOA only puts 8.5% of dues into reserves and they all require 10%. I have informed the HOA of this issue and there is no appetite to raise the contribution to 10%.

I am now considering selling the property as my $1,000 in rent only gets me to break even (high interest rate, HOA fees, property taxes) and there is no appetite to raise the contribution. I do not have $100K in cash to payoff the loan but do have another investment property that I own outright and is worth around $85K with $800/mo in rental income.

I am just beginning to learn and about hard money, etc. lending and am curious as to your thoughts on the best way to proceed.

Thanks in advance!

[Stephanie P.]

@Trent Dang

This is the reason lots of people hate condos.

You'll probably have a hard time selling the condo because it's "non-warrantable" and your ltv is too high to get a lender that doesn't care about whether it's warrantable or not.

Take the deal from your current lender so you don't get stuck with the balloon and pressure the HOA (even if you have to sue them) to get the budget up to an acceptable amount.