Too many investment prop loans

Years ago after a divorce and losing my own home, I began investing in real estate, both apts and single family homes. Since I was single, I rented and lived very simply. Now things have changed and I'd like to buy a home, but can't. I have good credit and assets, but have found I have more than ten (11) investment property loans. I own a small office building and that does not show up on my credit report. The SFRs (out of state) I have all show up, and I set up an LLC but the lender will not allow me to reregister these loans (even if I change property title to my LLC and risk them not implementing the due on sale clause). I have tried to sell 2 of the properties but of course would have to sell at fire sale prices.
Will any lenders consider me, even at a higher rate?
Can I move any of these loans to a corporate LLC? Seems no one wants to refi anything.
This was ignorant on my part. Any ideas, short of selling at a loss to get these loans off of my credit report? Any thought are appreciated. Thanks,
D

Edited: 06/26/2010 at 08:53AM

Karen Parker

Real Estate Investor · Tampa, Florida

456 posts
6 awards
50 influence

Jul 07 '09, 12:30 PM

I am not an expert on this by any means but I've been to a few seminars on asset protection using land trusts. It seems if you can conceal ownership in this manner you would also be able to pull those mortgages out of your name. Just a suggestion you might want to look into. Hope it helps.

Edited: 06/26/2010 at 08:53AM

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

Moderator Pro

12,319 posts
15 awards
95 influence

Jul 07 '09, 12:36 PM

Sorry, that won't work. The trust may conceal the ownership of the home, but it won't affect the note. The only way to get the note off your credit is to refinance into an entity. You may have to search around to find an investor friendly bank that will do commercial loans. If you have a good history on these properties, and they make money, you should be able to find a bank that would give you commercial loans on them.

Edited: 06/26/2010 at 08:53AM

Jon Holdman, Flying Phoenix LLC

Louis Bergman

Real Estate Investor · Weston, Florida

47 posts
2 awards
50 influence

Jul 08 '09, 12:37 AM

Please note that I am not giving any form of legal advice here as I am not qualified to do so. You should always run this by your Attorney, and follow HIS advice to the letter.
I want to be very clear about that, and start out by saying that this is what a seasoned Investor suggested to me at the time as a workable solution.

You have to realize upfront that this course of action requires quite a bit of work and you may still end up without a viable solution.
But here it goes.

Go to the IRS website and download all information on Form 1041. Sit down with your CPA and evaluate each property in your portfolio to see if you can restructure the ownership into a "Inter Vivos" (Living) Trust in compliance with these regulations.
Please note that I will not go into a discussion on whether Garn-StGermain's intended protection should ethically and rightfully apply.

But if you determine that on some of your holdings the restructuring makes sense, make the change on the Title. Inform the Lender that you transferred ownership to a Living Trust for estate planning purposes.
Next step is to have your CPA request a separate Tax ID number for each Trust.

After a month or two send in a letter to the Lender along with your monthly payment requesting that the interest should no longer be reported under your SSN, but to the Tax ID number of the Trust.

Keep checking your credit regularly to verify whether the Bank has complied with your request, as the Loan should no longer appear on your credit. Keep in mind that the Lender may elect not to do so, but you have a good chance they will.
If you can do this with several of your holdings, you will have a greater chance that a new Lender will once again be willing to finance an additional purchase.

Having said all that, it might be easier to just sell something so you end up with less then 10 properties again. Or just switch to commercial where these rules do not apply.

Good luck. :cool:

Edited: 06/26/2010 at 08:53AM

Alex Rearmice

11 posts
1 award
50 influence

Jul 19 '09, 08:06 AM

Isn't the magic number 4 right now? Or does that depend on the loan type we're talking about?

As I recall, it's yo-yo'd 5 times in the past year. It was 10 up till Aug 2008; then b/c of the Fannie guidelines, it was 4; then when all the buyers went away, the gov't raised it back to 10 in Oct 2008; then in Nov/Dec 2008, it once again reverted to 4; and as of Apr/May 2009, when I was trying to do a refi, 2 banks told me that 7 would be the new number "soon" but, alas, it's still at 4.

Or am I talking about some other type of loans?

Edited: 06/26/2010 at 09:02AM