All Forum Posts by: Marc Izquierdo

Mark Russell A few months ago, I posted a discussion about refinancing when you are maxed out (i.e. You can't get anymore conventional bank financing - debt to income ratio is too high). I think this would also apply to having no income (debt to income ratio would be undefined - dividing by zero) There were some good posts there. Have a look. Hopefully it helps. Future Refinancing Strategy on the BiggerPockets forums http://www.biggerpockets.com/forums/50/topics/459465-future-refinancing-strategy

Mark Russell This is a good question that I'm also interested in too. I've heard that you can use your property's income as "income" to get a loan but there is a seasoning period where you have to have that rental income coming in for a year or so before the bank will count it as income. I'm not sure if that applies to both residential and commercial. A commercial loan may be more forgiving on that (if they require it at all). Portfolio lenders may also may be a good option. Essentially you'll need to find lenders that will lend on the property more so than your personal financials. On one of the BP podcasts they talked about a strategy where, if you buy a property in cash, you can refinance out in a few weeks. I believe it is called delayed financing. Not sure how much help this provided. I'll be checking back here for some info also.

@Andreana Gallagher

I was recently in this dilemma also.  It depends on your goals, your time, and your current investing knowledge.  The below video helped me decide how I want to approach my license. 

The video discusses this more but, as a new investor, your time learning how to invest is very valuable.  You can become a successful investor without your license but I don't think you can become a successful investor with only your license (no investment knowledge).  My approach is to use my time actually investing (the license takes a lot of time dedication - and money) and learning more about investing.  Once my business gets rolling and I have some income, re-invest some of that income into getting my license.

Take a look.  Hopefully it helps you as it did me.

https://www.youtube.com/watch?v=7vS9basu8uc

Andrew Postell and Jason Million you guys answered my question great. I did not know those details about commercial loans. That definitely opens up more options. Thanks a lot!

@Andrew Postell  Thank you for your response!  Good information there.

In a hypothetical scenario, say I was maxed out of conventional loans.  Now, if I purchased a property with cash, rehabbed it, got it rented, and now want to refinance to take my cash out, I wouldn't be able to refinance into a conventional loan, right?  The way I read that passage in the book makes it seem like I would be able to despite being maxed out as long as the "seasoning" period has passed.  Is that the case?

While I'm maxed out, I know that I would not be able to get conventional financing to originally finance the property (that's when I would look into portfolio lenders).  My question arises when talking about a refinance.  Can I refinance into a conventional loan, despite being maxed out?   

@Megan Greathouse, great write up!  Congratulations.

@Sean Krause I did the following:

$139,000 * 0.25 = $34,750 (down payment)

Total repairs were $10,000

Total cash invested = Total Repairs + Down Payment ($34,750 + $10,000 = $44,750)

Total annual return = $6,468

CCROI = $6,468/$44,750 = 14.45%

We did not account for any closing costs that were likely paid in cash.  I'm assuming that if you included the closing costs into the total cash invested, you would arrive at approximately 13%. 

For example, I'm reading "The Book on Rental Property Investing" by BP.  I just read this:

Previously in the book, @Brandon Turner says that he has been maxed out from conventional financing for some time.  How can he refinance into a traditional 30 year mortgage?  Is being maxed out sort of "forgiven" if you have the property go through the "seasoning" period? 

@Harjeet Bhatti Thanks for the response.

So once I'm maxed out (conventionally), the only way to refinance out of hard money, cash, or a short term private lender is through a commercial lender or portfolio lender?

I've been thinking about the future and when the time comes where I will no longer be able to get a conventional loan from a bank.  The following potential situation leaves me with some questions.

When I can no longer get a conventional loan, I have the options of using hard money, cash, private lending, etc.  However, what is my exit strategy?  I know I can (and would like to) refinance out.  But since I can't get conventional lending, how would I get approved to refinance through a bank?

For example, if I buy a property with hard money (because I cannot get a conventional loan), how can I refinance? My DTI wouldn't have gotten any better. Or is this where the "seasoning" period comes in?

Same thing if I used a private lender, how would the lender get his investment/profits back?

If someone could explain this I would appreciate it.

Thanks!