What Type Of Loan Am I Looking For And What Banks Can Help?

3 Replies

I have 5 properties in houston, all paid off and all leased out. As you know we just had a hurricane and lots of properties are available. Would like to raise funds to buy some new ones. Currently grossing about $4300/mo from the paid off properties. Their taxable value total on the local tax district site is $315k. I also have 2 large parcels of land, taxable value on those is $270k total. All of these are paid off: $585k taxable value, but worth id say $650-700k. Anyways I would like to keep collecting the rent from the 5 properties but would like to borrow what I can from them to add new homes.

1) What is the name of loan im looking for? I bank with chase, they're not very investor friendly, could I go to a small bank that I dont bank with and they would possibly work with me?

2) the homes I have, they're low income housing, the people usually pay me with cash so I dont have the audited statements to show the cash flow of them.

3) What are typical terms and rates on the borrowing im looking to do? Assuming my paid off properties are say $650k total, could I borrow $500k? What would be the term and payment on that or is that considered a jumbo mortgage like a home mortgage?

4) I have 2 personal residences, a home and vacation home, as well as a car financed. Would these drag down my ability to borrow in this particular situation or no bc I have collateral im trying to borrow against? My taxable income was barely enough to slip in the vacation home financing last year.

Thank you

@Danny N.

1)pretty typical to get a cash out refinance or line of credit against the rented properties at 70-75% of current value. Income will be documented from tax returns but won't play a big part in the value assuming they are all 1-4 unit properties. The land becomes more difficult to get cash out on, probably closer to 50% of value (if there is even an appetite for the loan). You will be more in the $350k range for a loan assuming the bank will lend on the land.

2) income will be verified on taxes so if you are not reporting the cash as income - it will kill your DTI and could create an issue.

3) see number 1 for LTV constraints

4) DTI will be difficult without taxable income that can be documented - likely created an issue. 3 houses that don't create income will heavily offset those that do.

You will need a local bank to look this loan for you- Chase won't want anything to do with it. 

Thanks Travis. When I go into one of these smaller banks and go over what Im looking for am I looking for a loan with a 30 year amortization or are they typically shorter term loans? Im fine with either one I  just curious what I can and cannot do. I also have a vacation home worth about $600k in another state, I have about $375k in equity in it, would the local bank be able to help with that too? My vacation home is where I want to retire one day but it is currently rented out for now as well.

A local bank likely will not lend on a property in another state - you would either need a national lender or lender local to the vacation home in order to get a loan on that property.  I would take the longest term possible, probably going to be less than 10 years, 3-7 more typical.  Keep in mind you may get a 7 year term on a 20 yr am - which would increase payments and decrease cash flow accordingly. 

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