Banks won't approve me for a Cashout REFI!!!

[Luke Slapa]

I recently purchased a rental property for cash with a short term unsecured loan because it was such a good deal(numbers below). I figured since I owned 100% equity in the house and I am only seeking 65% LTV I would have no problems having a bank Cash out Refinance. Well turns out I was wrong, since I am self employed and my last two years didn't show much on my tax returns while I was a full time student NO banks want to deal with me, not even small local banks.

I am seeking advice and recommendations on how to pull out some equity on a rental house I own free and clear without seeking tax returns. I do not need a great deal. I am okay with a 10 year, 10% 65% LTV loan.

The personal loan I have is 18% interest rate over 5 years. I am cash flowing negative $22 per month with this loan, allocating for taxes, repairs, CAPX, loan.

Paid: $21,000+closing costs

Rents: $650 (long term reliable tenant) 

Appraised: $36,550

Thanks in advance for any help!

[Steve Vaughan]

Originally posted by @Stephanie Medellin:

@Luke Slapa  Even if you did show income on your taxes, with an appraised value of $36k, it's going to be very hard to find a loan simply due to loan amount.  I would focus on trying to get some good high credit line credit cards with 0% balance transfers, and keep moving the money around until paid off.  If you get 2 cards with $10,000 limits at 0% you'll be able to pay them down fairly quickly with the rent.  Or shop for a new personal loan - I think you'll have an easier time.  Keep in mind a fully maxed out card may temporarily decrease your credit score but it will bounce back as soon as the balance is paid down.

 My first ever free and clear was $23k in '05 bought with a 0% (but 3% fee) credit card check. Probably 2 or 3.  

I drove a beater, brown bagged my lunch and spent no money for 1 year. I also got an extra job.  Buckle down and pay this off. Transfer around with low interest offers if you can, like Stephanie mentions.

In '07 I got a cash-out refi for $106k and sold it last year for $145k.  Sacrifice now to harvest later.   My guess is you have a car payment and eat out a lot?  A beater and pb&j will go a long way and save what sounds like a great investment!