cash out - Posted by colin

Posted by Shaun on January 23, 2007 at 12:02:54:

You can acquire more than 10 properties…you just will not be able to get a fannie mae loan. You will have to look different lenders.

cash out - Posted by colin

Posted by colin on January 18, 2007 at 12:59:39:

Hello,
I am trying to figure out the smartest way to tap the equity out of my two investment properties. I would like to get 300k out if the rates and terms are not absurd.
I have a credit score of 763 I would probably want to go no Doc ( I am a proffesional but I work part time).
The two properties are worth $625K, I owe around $200k total. I do have strong financial backers that are available if needed.
I am looking to find the best scenario that will keep costs down.
My backers are willing to buy the properties from me at $625 I would want to assume the mortage if possible then pay them back their 10% down. Does this make sense?? How could I structure the deal so that I could get the mortage off their backs ?

Thankyou for your advice,

Colin

Re: cash out - Posted by Ben Carmona

Posted by Ben Carmona on January 18, 2007 at 16:47:03:

Colin,

What your indicating you want done doesnt make sense. First, most loan programs are not assumable. Second, all that restructing could run into issues when financing.

Why not just refinance the properties and get the equity out. You may not need a no doc. If you have 2 years of self employment in the same business or as an employee in the same line of work, then you may be able to qualify for a stated income or no ratio. That is assuming that these are residential 1-4 unit properties.

Here’s some info on cash out that I posted previously which seemed to be help others out quite a bit.

  1. If you listed the property at any point after your purchased. The majorit of lenders need the property off the market 6-12 months before refinancing.

  2. If you purchased the property in the name of a LLC. Wholesale lenders will only make loans with title vested in a personal name. So you would have to quit claim it. Sometimes this has to be done before the loan application is signed. Also, lenders may want to look at the LLC docs to make sure you were the sole owner of the LLC. If there were multiple owners the lender will question why they are not on the loan too and most of the time wont accept. Also, some lenders will consider the seasoning period on title to start over from the date the quit claim was done.

  3. Seasoning - This will be the biggest issue. It means the length of time you have owned the property. Traditional conventional financing does not have a seasoning restriction. So if your able to qualify for a NOO loan under Fannie Mae guidelines then you should be able to get this done with any conforming lender.

However, if you have challenges in your loan such as reduced documentation, high ltv, ownership of over 10 financed properties, lower credit score (but not below 620)…to name a few, then you will need an ALT-A (portfolio loan). These types of loans are offered by most of the same lenders doing conforming loans. It’s with these lenders that the seasoning restriction will become apparent. About 95% of all these programs will require 12 months seasoning, some 6 months, some have no seasoning if the ltv is< 75%, and there are just a couple who can waive the seasoning altogether.
**Using ALT-A loans opens up a whole set of other issues as well which most brokers will miss.

  1. Other issues that come up usually apply towards the appraisal. The appraiser must nail down the fact that the property was purchased under market value.

I highly recommend spending some time communicating with a mortgage consultant that specializes in investment loans. These are just a portion of the loan types they can easily assist you with.

Ben Carmona

Re: cash out - Posted by Kenny Donnell

Posted by Kenny Donnell on January 22, 2007 at 21:51:44:

Ben,

I have a question about the 10 financed property rule that I would like to discuss with you. Do you have a contact email or number that I can reach you at?

Basically, I currently build new homes and with the change in market I am looking at building the home, putting a mtg on the property, and then renting or leasing them out. I have a few questions about the 10 property rule and how to possibly work within the law but acquire more than 10 within a portfolio.