How to use Cash wisely and Refi

Question

Hi , IF I bought lets say 15 houses all cash and want to refi, what is the smart way to do it, you can't owner occupy all of them, do a lot of them become investment loans, or is there a smart way to get several primary residence, secondary and then investor loans?   thank you for your time

Jerry Padilla · Answer

@Alec Khlebopros

Overall conventional will have the best rates, but as mentioned you are limited to 10 and then would have to go to portfolio lending. You can only get a primary residence rate on your current primary and the expectation is that you live there for a year after the refinance. A second - the same thing, you are expected to live there for some portion of the year. Investment properties, need to be mortgaged as just that an investment property or it is mortgage fraud.

You can finance multiple conventional mortgages at a time, whether it is cashing out or purchases. I do 3 package, 5 package etc deals for clients frequently. They are all individually financed, but are done at the same time.

For the 5 properties you own free and clear, you could cash out all 5 at the same time with conventional if you wanted to. A SFR is going to be an LTV of 75% and a MFzr is going to be 70%.

Alexander Felice · Answer

rate is just one part of the deal though, a small part. If you go by rate then getting 5 fannie loans is best, but it's overall inefficient.

what are the houses worth? My suggestion is to wrap as many as you need to hit 250k and take a commercial loan out and buy some more (if possible). that gets you started in debt, gets you back to buying, and hopefully wont' leverage you too hard.

Alec Khlebopros · Answer

@Jerry Padilla Thanks for your answer, what would the rates look like with someone who has excellent credit if you did five individual loans on a 30 fixed...thanks

Alec Khlebopros · Answer

@Alexander Felice thanks for the reply, my thinking at this point is this exactly, and I"m new at this so trying to figure out the most efficient way to do this.  I currently have 5 properties all cash in areas where it cash flows and will appreciate, I will scale to 10, I"m running out of my own cash, I have enough saved for my business and knicks knacks so I don't touch that.  Going forward I"m trying to figure out how to get the best rate on the convetnional loans, since in my understanding after you get your primary residence, which has best rate and secondary residence, all others are investor loans with higher rates.   So my question is how do you get the best rate on the loan and through which vehicle. Where am I faltering here and thank  you for every ones time.

Alexander Felice · Answer

the specifics really matter here.

Is it 15 houses and you want a loan on all of them? that's easy

or is it 4 at a time? that's still easy as long as the loan amounts hit the bank desired minimum

Is it one at a time? you can get 10 individual conventional mortgages, but if you had 10 all at once you wouldn't do it that way. So if you're accumulating them one at a time then you would get to 10 and then adapt (wrap to a commercial loan, shuffle the properties from SchE to schC). Problem there is once you get to 10 you'll realize that SFR is an inefficient asset class to scale and you'll want to buy bigger properties.

Alec Khlebopros · Answer

@Larry T.  lets say it's 10 houses, are the conventional loans going to be broken down to primary, and then  after that count as investor loans? with higher rates?

Alec Khlebopros · Answer

Thanks @Thomas Garza, you're right, it's 10, but how is it done, lets say on 10 to get best rates?

@Thomas Garza

Larry Turowski · Answer

@Alec Khlebopros You might bring the first four to a bank and get conventional investor mortgages on them but after that you'll need to go to a portfolio lender.  You'll basically be considered a business whether or not you are incorporated.

Thomas Garza · Answer

Maybe you could find a portfolio loan that packages many or all of them together. You will probably get a better interest rate financing them as conventional mortgages, but you will probably have a hard time finding a lender who will give you 15 mortgages (I heard the max is around 10).

How to use Cash wisely and Refi

Most Popular Reply