Experienced investor looking for advice on next move.

[Kelly Moniz]

I have been investing in realesate since 2011. Here is a quick run down on my current situation. My father has been my 50/50 partner since day one. We buy severly distressed properties, do all the work ourselves, and rent them out. They are all cash deals. Once we run out of cash for more house purchases, we do a cash out refi on one of our homes. We have 11 properties and only 2 mortgages. All single family homes in good areas within 15 miles of where my father lives. Just east of Raleigh NC.  We manage all of the properties. We have racked up about 45k in credit card debt. Normally we would wipe out all of our cc debt after a refi before purchasing a new home. It seems as though the deals have dried up at the moment, so i am not really thinking a refi would be the best move. We have roughly 1.5m worth of realestate with only 225k worth of mortgages. We are however no longer liquid after just finishing a major renovation. So just seeing what kind of financial advice i can get to drag ourselves out of this slump. Would a hard cash loan be worth it to wipe the credit cards out with? We are able to pay ourselves a salary and contribute 4500 to the cc bills every month after all of our overhead but it would take a year to pay it all down. It would also take a year to pay back a hard cash loan. Also, any advice on a future strategy i can do with all the equity? 

Thanks 

[Chris Martin]

#1 -  the concept of a HELOC (borrowing against equity whenever you want, up to limits) is fine and I agree that from what is posted this solution may be a good fit, but

#2 - if you go to a bank and try to get a HELOC, I am 95% sure you rental properties won't qualify. HELOCs are for your personal residence, as in where you live. What you want is a LOC (Line of Credit) on a qualified, non-owner occupied property. Each bank underwrites differently, but I would bet 95% of commercial banks would be overjoyed to have your equity rich, lightly encumbered business.

So... since you aren't talking to banks and are asking about hard money, but have 2 mortgages on rental property already... is there a reason for you not to just do another cash-out refinance? Rates on fixed terms are well below alternative financing (hard money, private money). And having a third (or fourth) mortgage would insulate you from "calls" on your LOC. Since you started in 2011, you probably missed the nightmares after the great recession when banks 'took back' their LOCs, HELOCs, etc., and made everyone pay up or risk foreclosure. Not that this will happen again, but why not lock in terms for the long term?

So my vote would be for a traditional cash out refinance on non-owner occupied property. Fannie Mae can underwrite this (and does every day), unlike a LOC or 'rental HELOC'. A mortgage broker would get you the best rate and terms for what you want and since they underwrite through FNMA (or other GSE) they can operate anywhere in the US.