Over four cash out - legal loophole?

5 Replies

We would like to buy a house with cash in San Antonio and rehab it then cash out some of our capital to reuse on another buy and hold - rinse and repeat. We will hit the four loan limit soon. Any creative ways around this? 

Would it be legal for an LLC or other entity that I have an interest in to buy and rehab the home with cash then sell to me as an individual thus making a cash out unnecessary to access the capital yet acquire conventional financing? Just looking for options to exercise this strategy after four mortgages.

Thanks in advance!


@Will Pritchett It is about bank policies, not legalities.  Some banks will let you have up to ten properties.  Some may let you have even more.  Call around to banks and ask if they are portfolio lenders.  They lend to investors.  What you are trying to do is what many many investors are doing.  Buy with cash, rehab, refi out at probably 70% loan to value, which if you have bought right, may leave about 10% of your investment into the property.  Rinse and repeat.


You can buy and rehab it with cash--get it leased out--and then cash out up to the original purchase price plus the new closing costs as long as that number is less than 70% of the new appraisal--most lenders refer to this as "delayed financing"--send me a PM and I'll give you the contact info of who I have used in SA and I'm sure she can help you out.


@Larry T. and @Nick Disney thank you both for the input. I will try portfolio lenders. My bank would do up to four with cash out but more with normal down payment etc. I never know when it is a law and when it is just one bank's rule. Thanks again. 

Tapping into portfolio lenders would be a great idea. They usually allow you to cross the four mortgage limit. Some even allow you to have out as many mortgages as you can feasibly sustain!

@Will Pritchett

If you can do the rehab in less than 6 months and you qualify for Delayed financing this is how you would be able to do this cash out. Loans 5 - 10 Fannie will allow you to do a c/o as long as you follow certain guidelines under the delayed financing rule. If you PM me I can email you those guides if you'd like. I would post on here but it's a lot to write down.

I hope this helps.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.