Where Are You Getting Your Cash Out Refinance Today?

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Where Are You Getting Your Cash Out Refinance Today?

Steve LeBlanc
Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes

With all the underwriting guidelines changing due to COVID, where are you folks finding "decent" deals on cash out refinancing that's worth looking at?  I'm finding that either the rate is not attractive enough or the fees are insanely high.  What are you finding and willing to share? 

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Wendy Harden
Rental Property Investor · CA · Member since 2020 · 6 posts · 7 votes
6y

I just finished on a cash out refi on a CA rental: 3.625%, 2 points, 30 years, 75% LTV

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  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    6y

    @Account Closed Where are you investing right now? Which state?

    480-206-1209Podcast Guest on Show #287
    1Reply
  • Steve LeBlanc
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes
    6y

    @Edward Derosa suburbs of Alabama. Keep in mind, these are B-/C+ properties. Rent is $500 per door

    1Reply
  • Steve LeBlanc
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes
    6y

    @Shiloh Lundahl at this very moment...Alabama.

    1Reply
  • Steve LeBlanc
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes
    6y

    @Shiloh Lundahl would love to see the numbers if you’re willing to share like I did above.

    0Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    6y

    @Steve LeBlanc I just closed a property with my daughter yesterday.
    Purchase price (including closing costs) $160k
    Rehab 20K
    ARV 213k
    Sell on the lease option for 225k with a 4K option fee
    Get a long term loan for 160k
    Monthly Lease Payment $1350
    mortgage (4%, 30 years) $760
    Taxes and insurance $140
    Tenant takes care of repairs and maintenance 0
    Because it is a lease option managing the property is minimal 0
    Monthly cash flow $450
    total that I have left into the property after refinancing 20k

    ROI (450 x 12 = $5400 / 20000) 27%

    If I bring in a second position lender for 10k at 10% for 3 years, then my cash flow would go down by $83 a month but my ROI would go to 54%. With 30k created in equity.

    This isn’t really one of my better deals. It’s just the one I picked up yesterday.

    480-206-1209Podcast Guest on Show #287
    1Reply
  • Steve LeBlanc
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes
    6y

    @Shiloh Lundahl I didn’t notice what the rent collected amount was?

    I truly find your numbers very difficult to believe, but I’m certainly not calling you a liar.

    In Phoenix, there is no place in the valley that is valued around $200k would even be able to rent for the mortgage you have listed there.

    For example, I own 3 homes in Surprise, which is a “cheaper” area than any of the more attractive areas like Scottsdale, which doesn’t even have homes valued that low. Those 3 homes are all valued close to $300k and rent in the $1500+ range

    So finding a $200 ARV home and renting it, anywhere in the Phoenix valley.... I've not seen it.

    0Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    6y

    @Steve LeBlanc I’m not offended. The rent amount was written above as “monthly lease payment $1350.”

    Here is the property listing on Zillow: https://www.zillow.com/homedet...

    If you change the rent filters on Zillow to 3 bedrooms within a few miles of the house, the cheapest is $1495 right now.

    480-206-1209Podcast Guest on Show #287
    1Reply
  • Patrick McGrath
    Rental Property Investor · Westminster, MD · Member since 2014 · 165 posts · 221 votes
    6y

    @Steve LeBlanc

    Just got 4% on 30 year on a cash-out refi loan is $240k

    0Reply
  • Steve LeBlanc
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes
    6y

    @Patrick McGrath with what lender?

    0Reply
  • Luciana W.
    Rental Property Investor · Savannah, GA · Member since 2019 · 66 posts · 30 votes
    6y

    @Steve LeBlanc

    Hi,

    I'm kind of a Newbie here, I was looking at this tread because I'm planing on cash out refi my first BRRR soon. My question is, when you refinance, if your property is inside a LLC, do you pull it out refi and than put back in, or try to find a lender that can lend inside the LLC avoiding this hassle?

    0Reply
  • Patrick McGrath
    Rental Property Investor · Westminster, MD · Member since 2014 · 165 posts · 221 votes
    6y

    @Steve LeBlanc

    SWBC Mortgage - Jamie Lense

    1Reply
  • Ron Szmik
    Real Estate Agent · Brecksville, OH · Member since 2011 · 166 posts · 75 votes
    6y

    @Steve LeBlanc Just sent you a request with the info.  Good luck.

    1Reply
  • William Taylor
    Member since 2019 · 16 posts · 10 votes
    6y

    @Patrick McGrath was this a multifam? Owner occupied?

    I have a NOO 4plex owner outright and I'm beginning to look around for financing.

    0Reply
  • Patrick McGrath
    Rental Property Investor · Westminster, MD · Member since 2014 · 165 posts · 221 votes
    6y

    @William Taylor

    3 plex multifamily non owner occupied cash out

    0Reply
  • Kyle Bergren
    Las Vegas, NV · Member since 2018 · 86 posts · 38 votes
    6y

    @Steve LeBlanc Thanks for starting this trends! Its a very worthwhile questions where one can find a good bank that fits their needs.  Here's my data point with FlagStaff Mortgage - however I do not recommend unless you're down submitting 107 plus documents and 7 seperate underwriter reviews!

    Loan Amount: $86250

    Interest Rate: 5.125%

    Origination Charges: $1910

    Appraisal & Credit Reports: $955

    Title: $1500

    Total Loan Costs: $4365

    @Ian Stuart I've got two question for you - after hitting a Fannie/Fredie landmine this week on my latest BRRRR.

    1. Im being told that because I used a HELOC to purchase this rental property that its ineligable for delayed financing. I paid off and closed this HELOC last month and because - This just sounds wonky to me.

    2. If this is true, this fact was presented to my lendor very ealry in the process. I've asked my lendor to refund my appraisal fee because of the mistake but that didn't go anywhere. Are there professional vehicles to lodge complaints/issues against specific mortgage officers?

    0Reply
  • Ian Stuart
    Lender · Seattle, WA · Member since 2017 · 118 posts · 161 votes
    6y

    @Kyle Bergren

    I am strictly a multifamily Fannie Mae DUS / Freddie Mac Seller Servicer. My minimum loan size is $750K - I do not do loans less than this metric. 

    Sounds like there was a material lapse in communication with your lender, which led to information surfacing during underwriting that negatively impacted your deal. Future reference - the onus is on the borrower to make it crystal clear to their lender what type of deal they're working with, provide more than enough info/documentation, and for the lender to do their best to identify potential potholes in the road before going under app. 

    If you are inexperienced - the onus is on you to assemble a team around you (a lender) that is more experienced than you are. This is why it is important to ask about (a) track record (b) analytical capacity (c) questions related to specific underwriting rules (d) etc. before you go under app - to determine whether or not you're working with a sleazy salesman, or a mortgage banker. 

    Your lender should've asked about this up front - but you also bear the responsibility for not vetting your banker well enough up front. As I'm sure you know - there are many incompetent jokers in real estate lending who should instead be selling used cars. The onus is on you to vet these clowns to ensure you don't get re-traded. 

    That sucks!

    Best,

    Ian

    1Reply
  • Kyle Bergren
    Las Vegas, NV · Member since 2018 · 86 posts · 38 votes
    6y

    @Ian Stuart thanks for the sound advice. I went with the said vendor because that was the place other investors are doing. Oh well.

    Just looked into how easy is it is to become a licensed residential mortgage broker - There's less training standards than becoming an a real estate agent in many states. That is scary.

    Well sounds like I've gotta to get my own mortgage broker license going forward and negotiate directly with the banks and underwriters. 

    1Reply
  • Steve LeBlanc
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes
    6y

    As you can see from the thread, it's not that easy to find "suitable" or "efficient" cash out refinancing for investment properties that are excellent opportunities, but "too small" for many lenders to take on. 

    2Reply
  • Steve LeBlanc
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes
    6y
    Originally posted by @Sean Julian:

    @Steve LeBlanc

    Have you tried PenFed? $100 gets you a savings account and $500 gets you no fees. Then they were willing to do an 80% cash out down to $50K loan as long as I held the place for 6 months. It might be worth a call. They are all over the US. I invest out of state.

    https://www.penfed.org/mortgage-center

    As of 13 July, PenFed is not doing investment properties. 

    2Reply
  • Sean Julian
    Rental Property Investor · Porter, TX · Member since 2020 · 93 posts · 42 votes
    6y

    @Steve LeBlanc oh no! That’s terrible.

    I was given two more names but haven’t called. MJW Financial and Huntington Bank

    0Reply
  • William Taylor
    Member since 2019 · 16 posts · 10 votes
    6y

    @Steve LeBlanc are they still doing investment property HELOCs? It seems they’re still listed on the site.

    0Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    6y
    Originally posted by @Shiloh Lundahl:

    @Steve LeBlanc I’m not offended. The rent amount was written above as “monthly lease payment $1350.”

    Here is the property listing on Zillow: https://www.zillow.com/homedet...

    If you change the rent filters on Zillow to 3 bedrooms within a few miles of the house, the cheapest is $1495 right now.

    Steve, did you follow up on the numbers that I posted that you disagreed with?

    480-206-1209Podcast Guest on Show #287
    0Reply
  • Steve LeBlanc
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes
    6y
    Originally posted by @Shiloh Lundahl:

    @Steve LeBlanc I just closed a property with my daughter yesterday.
    Purchase price (including closing costs) $160k
    Rehab 20K
    ARV 213k
    Sell on the lease option for 225k with a 4K option fee
    Get a long term loan for 160k
    Monthly Lease Payment $1350
    mortgage (4%, 30 years) $760
    Taxes and insurance $140
    Tenant takes care of repairs and maintenance 0
    Because it is a lease option managing the property is minimal 0
    Monthly cash flow $450
    total that I have left into the property after refinancing 20k

    ROI (450 x 12 = $5400 / 20000) 27%

    If I bring in a second position lender for 10k at 10% for 3 years, then my cash flow would go down by $83 a month but my ROI would go to 54%. With 30k created in equity.

    This isn’t really one of my better deals. It’s just the one I picked up yesterday.

    Looking at the property, I would be shocked that it rents for $1350 especially in that neighborhood (also indicated by the annual taxes of $530 and low insurance).  But, okay, you collect $1350 in rent.  

    I would agree that you have a great cash flow opportunity there...but structured quite differently than most scenarios in that you have the lease option.  

    Whereas for me, I'd have ~10% cost in a PM and another ~10% in set asides for mx/vacancy bringing ROI to about 10%. I noticed you didn't add any closing costs into your cash out of pocket calculation...which still counts.

    More realistic numbers in that scenario are:

    $450 cash flow

    minus $135 for PM

    minus $135 for set asides

    Remaining CF: $180/month x 12 months equals $2160 annually divided by $23000 (including some closing costs, lenders and title don't work for free unfortunately)...ROI = 9%

    0Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    6y

    Well @Steve LeBlanc I don't really know you and there is nothing on your profile that helps me really know who you are or your experience level. But I think it is interesting that rather than ask me how I am cash flowing so well in this market in order to learn and expand your real estate experience and knowledge, you instead just try to debunk my deal.  

    You originally wanted to know how well people were doing with trying to get cash out refis.  I mentioned that I was finding cash flowing properties in Arizona.  You asked me for the numbers.  I provided them.  Then you stated that you did't believe them.  I showed a link to the property and that you could look up on Zillow to see what the rents are in the area.  You then doubted that I could get those kinds of rents in the area. Are you an expert in the area?  I guess I am just trying to understand if you created this post because you just wanted to tell people your opinion and you didn't really want to hear from or learn from people that are doing things that are contrary to your opinion. Or if you think it can’t be done because your not doing it.

    I have 13 properties in that area and a mobile home park and the numbers that I stated are the numbers I am getting on my properties there.

    As I mentioned before, the property I outlined is not my best deal, it was just my last deal. My better deals are like the 6-plex I bought in Florence, Arizona at the end of January for 320k. After putting 40k into it and raising rents, the property was appraised at 725k.  We are getting a loan for 504k and getting 175k out as a cash out refi. So the answer is yes. You can still get cash out refis right now.

    480-206-1209Podcast Guest on Show #287
    0Reply
  • Steve LeBlanc
    OP
    Rental Property Investor · Phoenix, AZ · Member since 2008 · 72 posts · 40 votes
    6y

    I clearly struck a nerve @Shiloh Lundahl. My apologies, wasn't my intention.  I certainly do not claim to be an expert, but do have 13 years experience in the Phoenix market as well as nationally.  This is by no means my core field, I just do this for fun.  

    Most deals that people share can use a little "debunking" because they are rarely 100% genuine. Yours was perfect, I simply added some more clarity for the audience because those little details like the lease option are pretty key in doing calculations, as I showed.

    And you're right, I did want to know where people were able to find cash out refi opportunities.  Your deal admittedly caught my attention because Phoenix is hardly a cash-flowing market (it's an appreciating market).  UNLESS, you're in the very distressed areas, like the one example you shared.  And that's not a dig...at all, C-class almost always cash flows well and I share in your strategy in other markets.

    Many, if not most lenders, are not doing multi-family cash outs under $300k, $400k, $500, etc. 

    My particular deals that drove me to start the thread are around the $140K mark (4-plex) renting for $500/door.  

    And there is nothing wrong with Netflix, sir. 

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