Refinancing fully owned rental properties

[Ben Bakhshi]

My dad owns 5 rental properties free and clear.
He is looking to get cash out of them in order to purchase more properties.
Main problem is: he did not earn income with w-2 for 2012, sort of an aberration, which is a bummer, but its history. He does have steady income from rental properties that he owns outright, and also from dividends of his business equity.
Also, he is currently has about 8 properties with mortgages or HELOCs on them.

Ideally he could get a 30 year fixed, and secondary goal would be a HELOC, on each of the 5 rental properties.

It seems like he will need to attempt to qualify for financing based on the merits of each individual property.
Are there any banks that will lend based on the merits of an individual property alone? I'm guessing they will want to look at his overall debt to income ratio, but maybe I am wrong.

Prop #1 - Est. Value $115,000, Rented for $1500
Prop #2 - Est. Value $82,500, Rented for $900
Prop #3 - Est. Value $65,000, Rented for $975
Prop #4 - Est. Value $50,000, Rented for $900
Prop #5 - Est. Value $35,000, Rented for $600

I know banks will qualify 75% of rents. And are looking for debt to income of 40% max. That means that he can make debt/mortgage payments of basically 30% of the rent.

Any recommendations of straight shooting banks that can turn around loans like these quickly?

[Jake Kucheck]

You guys are splitting the smallest of hairs.

There are two types of loans:

Purchase money and refinance. Both are new loans so that's not a distinction to make.

Purchase money is fairly simple- you are using the loan to purchase the property. You don't own the property prior to the loan funding.

Refinance comes in two flavors- cash out and rate/term. What the OP is trying to do is a cash out refinance. The distinction is that he is starting with zero debt as opposed to paying off an existing trust deed and replacing it with a new one that is bigger.

As for the initial question- you might be able to get loans on one or two of these, but probably not all five. That is going to be ratio and lender dependent. As I believe Jon was suggesting, you'll have more like with CUs and smaller lender's that keep their own stuff than the sell and bundle institutions, because this is an outside the box type deal. You might also look into CCing the five properties... you'll likely pay a higher interest rate for this, but debt is sometimes better than no debt (until it isn't).