Cash out refinance (more that 4 financed properties) and portfolio lenders

[Jean G.]

Hello,

I am trying to find a solution to do a cash out refinance on a property in Nevada purchased 2 years ago, recently appraised for $192k and that does not currently have any mortgage on it.

Because I own more than 4 financed properties, I cannot go the conventional route because Fannie/Freddie rules do not allow cash out past 4 financed properties (or so I am told).

Now to my question: I know that I am supposed to talk to small local banks and find one that keeps loans inhouse (portfolio lender) so they do not care about Freddie/Fannie. I have spoken to several local banks, and I always end up with their commercial lending department, and the longest they will fix rates is for 5 years. For example several banks offered a 10 year loan with a rerate at 5 years.

What I would like to know from people that have already done this, is whether it is realistic to find a local portfolio lender that will offer a 30 y loan with a rate fixed for 30 y, or is this only possible thanks to government involvement on conventional loans?
There are still dozens of more banks I could call, but if 30y fixed doesn't exist in the commercial loan space, then I don't want to be wasting my and their time...

Thank you!

Jean

PS: I am aware that B2R is working on a 30y fixed, single property program, but it is not ready yet, and First Key may offer something like this but they do not lend in Nevada. I'd be happy to learn about any other national lenders to talk to.

[Skyler Smith]

@Jean G.

You're on the right track if they're sending you to the commercial lender at the bank. Even though it's not a commercial loan, their retail lenders are all just going to offer the Fannie/Freddie options. 

I don't see much of a problem with getting a new loan every 5-10 years if the money is good. You are still maximizing leverage, and the money ought to cost something! My suggestion though is that you see if a commercial lender will give you a line of credit on the property. You didn't say why you want the cash, but my guess it's to buy more real estate! The credit line will still probably only have a 10 year term (sometimes you can borrow for 10 years and then you have an additional 5 or 10 yr period to pay it all back) but there are some huge advantages. 

• Many banks will charge very low or no closing costs on a credit line
• You only have to qualify for the credit line once - if you're flipping or cash buying and refinancing, you can rinse and repeat without even notifying a lender!
• Though the rates aren't fixed, you only pay interest on the cash you're using. That way you only have payments when you are actually using the credit line, and any additional cash flow can just go right back in to paying off the line.

This is pretty much the infinite banking concept, but with SO much more control. The property is throwing off so much more income than a bank account would, so why not just become the bank?