Seeking Investment Property Loan Advice

[Josh Payne]

Hello

For all the BP mortgage brokers in Texas...

My wife and I, with a partner, purchased an investment property in Rowlett, TX. We live in Oregon. Property was purchased with cash from the other investor, we provided  all the work from finding to closing. It’s been 6+ months. We’re now seeking a loan to pay back other investor. Property is worth approx 200k and we’re seeking approx 100k. The other investor would like to stay off any type of loan. I’ve been told that banks in TX are not able/willing to do a cash out refi on investment properties. Is this true? Any advice on seeking a different loan product(s) wold be great. 

Thanks

Josh 

[Andrew Postell]

@Josh Payne thanks for posting about this topic.  And @Tim Koger thanks for the mention.  

In Texas Josh there are a lot of weird cash out rules.  And the fact that investment properties foreclose at a higher rate than primary homes means that a lot of banks just want to stay away from them entirely.  It might sound even weirder but that loan amount might be too small for some banks too.  As investors, we speak on working with smaller banks.  Usually they are more flexible than larger entities.

To answer your question directly, YES, you can absolutely pull $100k out. Now depending on how the partnership, ownership of home, loan type, etc. will dictate who needs to go on the loan. For example, if you have the property deeded to your LLC...and your LLC is owned equally by you and your partner....then Fannie Mae would want you both on that their loan. If it's deeded in your names individually they won't. Confused yet? A commercial loan won't have those types of restrictions but the rate will be higher. There is a lot to this for sure. I don't like sales pressure. If you want to message me directly feel free but here's the list of questions I recommend every investor to ask their banks as they interview them (remember, you are the customer. They need to earn YOUR business...not the other way around):

Questions for Lenders

1. When do you start using rental income to help me qualify? (the answer needs to be immediately)
2. How long do you need me to be on title to refinance? (this is important if you do need a short term loan to purchase then refinance out - and the answer should be 1 day...very important that it is 1 day on title is all that is needed to refinance)
3. What is my minimum down payment required? (not so important but if they only require 15% down on a single family home that is usually a good sign that you are working with a flexible lender)
4. Can I change title to my LLC?
5. Do you sell your mortgages?
6. What is your loan minimum?
7. Can you explain to me what your reserve requirements are?

Feel free to tag me if you have any other questions.  Thanks!