How do you pull off the cash out refi in Texas or finance multiple rentals with TX50A6 statute?

[Paul Jones]

I am a newbie, but I have one free and clear rental SFH with excellent cash flow. I wanted to do a cash out refi of about 50% LTV to get the next one or two, but was told by my banker, "can't do it." He said no bank will do a cash out refi on any property that is not your homestead/owner occupied due to a Texas statute TX50a6. That really blew my buy and hold strategy and hopes to build my rental property portfolio all to heck. My banker basically said that it's a cash business and that's the only way I will acquire additional rental properties. I know people must be doing it somehow, some way in Texas without having tons of cash to buy properties free and clear. I have some cash, but don't want to use all my capital up on just a couple of income properties and then find myself up against a wall and not be able to buy any more. We own our residence free and clear but do not want to do a HELOC on our residence. We want that to be our safe haven no matter what happens with our investing. We are middle aged and don't have decades to save and then buy another property. We have great credit and look good on paper. The one SFH income property mentioned above is being held in our LLC and we are building our business credit as we speak. I know you fellow Texans have found a way around this TX50a6 rule. Please clue me in as to how to proceed and acquire additional income properties (buy and hold) for our retirement income strategy. Any advice would be greatly appreciated.

[Tyler H.]

I'm not sure this banker knew what he was talking about, is he a licensed RMLO? 50a6 laws apply to homestead properties, capped at 80% LTV on a cash out refi, they do not apply to non owner occupied properties. Consult a true mortgage banker, they may have a program to help you out.

FYI, The LLC title vesting may be an issue for some lenders, programs.