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Updated over 10 years ago on . Most recent reply

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Marci Stein
  • Rental Property Investor
  • New York, NY
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cash out refi- very hard time-Am I missing something?

Marci Stein
  • Rental Property Investor
  • New York, NY
Posted

Trying to follow all the good advise here, such as , buy for all cash,  extract the equity out on a cash refi loan. Rinse and repeat.  Sounds easy, but no one said the loan is based on my tax return income in order to do that.  it's not a loan based on the amount of equity I have , which is what i thought, but on income .  I am in my own business and  do not have a good net income, barely 24,000. Even though my credit  score is 745, have no debt, and own 3 homes I cannot get a cash out refi loan. 

Do I have any options other than hard money loans? Thanks.

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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
ModeratorReplied

Bank loans on small properties are almost always based on the borrower's personal qualification.  That includes credit score, cash reserves and income.  If you've been a landlord long enough (typically two years, but that varies) you can include the rental income.  That is the net numbers from your tax return for the rentals.

Cash out is always tougher than a rate and term refi.  If you want a purely asset based loan, you do indeed need to try more lenders.  These are sometimes called "non recourse" because the lender has no recourse except the property.  Expect maximum LTVs of 60-65%.  Probably not 30 year fixed, either.  Find a lender that does portfolio loans rather than just conventional.

HELOCs (really, LOCs, since its not your home) are possible, but have the same qualification issues.

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