Having Trouble Getting More Financing

[Derek Persuit]

Hey everyone!

I am currently in the "Refinance" phase of a BRRRR. This is my first one and Im really just feeling out how everything goes. I currently have 3 rental Properties. 2 are leveraged with mortgages and the one that I am refinancing, I own free and clear. The property isnt much. It appraised at $67,000. I have cash funds that will cover the entire 75% LTV cash out. Im also locking down another duplex that I will do another BRRRR on. This is the "Repeat" phase. The bank is telling me that because of this, it will add more layers to whether I will be approved or not.

Here is my current situation:

No housing costs

3 positive cashflowing assets

Current income is roughly 7800/mo.

Family monthly expenses <1000

I have spent cash flow from these assets on improvements and continuing my business of real estate. This is reflected on my tax returns as taking small losses and write-offs from my properties. The bank says this is what they're going by and that I may not get approved. I am having trouble comprehending this. My expenses are low. Work income is decent. All properties are long-term leased. It would be only my third mortgage. Surely someone has come across gaining a third mortgage in their journey and this wasnt the case. Can anyone tell me a similar scenario and how you handled it? Does this sound accurate to anyone? I have been trying to secure this loan for maybe 5 months. I have good credit. I have cash reserves. Im just at a loss for why im seen as such a liability for them at this level of cashout.

Thanks in advance for your help everyone!

[Patrick S.]

Hey @Derek Persuit, first off, congrats on the success thus far! I'm not an expert by any stretch, but I do like to explore my creative financing options.

As far as your situation goes, have you tried several local banks and credit unions? They're *usually* more willing to work with you on these types of deals. You're going to have to get a cash-out refinance, which is essentially a reverse mortgage, and you'll probably have to settle for 75% LTV or less. In your case, that's only a $50k loan, which as @Timothy Hero pointed out isn't very appetizing for most lenders.

Another option is to continue acquiring properties (2+ more, specifically) and getting a portfolio loans. The rates probably won't be as good as the rates you're paying on your rentals right now, but it gives you the ability to roll all of your properties into one loan. There's typically a $500k portfolio loan minimum though, so it entirely depends on how much your loans are on those other properties. In which case, you might have to get to 6, 7, 8, etc properties before you meet their portfolio minimums.

Last option I'd try is a HML that is willing to take on the risk. You'll pay a high interest rate, maybe as high as 10-12%, but you'll be able to pull that equity out of the property, if it's that critical to you.