I met with a commercial lender to see if I could put together a line of credit collateralized by the properties I already have. He said he could do it, but I would be refinancing my cheap 30yr mortgages into shorter 15yrs, and they would adjust every 5yrs. Not to mention the points and other costs involved.
So, thank you; but no.
What I gathered from the conversation was that I should probably get a little more equity in my primary residence, then I could secure a HELOC on that and THEN go shopping for new rentals.
The goal of all this was to get into a position where I could buy a midrange house for cash, then refi into a 30yr mortgage.
1. Find a lender that will lend me money based on the appraised value.
2. Find deals that will appraise for at least 20% more than my purchase price.
@Carter Melvin maybe Im missing something but isn't ordering an appraisal one of the first things a lender does? Did this bank use some other criteria to determine how much your property was worth and how much you could borrow? You should be able to get a 25 year loan on a commercial property.
I don't think my post was clear. I have 3 residential rental properties and my plan was to take the equity that has appreciated above my purchase price and use it to buy another residential house cash. He said a number of times that most banks would be shy to do this b/c of getting burned a few years ago, but I know Wells Fargo will do it, I just haven't talked with them yet. He also said his bank is a smaller bank (they don't do residential mortgages anymore). There are plenty of banks in the area, moving on to the next one.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing