Advice on Financing: Cash-out Refinance, HELOC or other?

Question

Good evening everyone!   I am hoping to get some advice or direction with my current situation....

I currently own:

4plex - in Montana (Owe $200k / equity $70k)

SFH - Montana (Owe $100k / equity $70k)

SFH - Florida (Owe $100k / equity $50k)

SFH - Ohio (free & clear / equity $50k)

Right now I am realizing there are better deals out there that I would like to be a part of but do not have the cash to purchase.  Thinking about doing some kind of financing to jump start things and start purchasing a couple properties and just build off of that....

I have little experience with Home Equity Loans or HELOC's & I haven't done a Cashout Refinance before either....

Just interested in hearing suggestions and information that can better educate me on the process.

Bryan C. · Answer

@Waylon Themer

thanks for the comments.  As much as I dont want to sell all 3 ....it seems in my best interest to do so.  Just glad to realize this now and understand that there are much better deals out there than to stick with these properties.

Waylon Themer · Answer

@Bryan C. it looks like you have $690k in property value vs. $450k in loan balances.  It will be tough to pull out $100k as that will put you right at 80% before closing costs.  Figuring closing costs to be around 3%,  it looks like you could get about $50k out using 75% LTV portfolio loans.  It may be tough to find a blanket loan because the properties cross state lines.

It looks like selling one or two properties is your best option to achieve the capital request.  Maybe sell the free and clear $50k property and cash out the $170k property.

Gordon Cuffe · Answer

You can also look into refinancing your current first mortgages and getting new cash out loans at 75% of value. That could be a good way to go if you could get rates lower than your current rates. If your tired of a property, you can sell it and do a 1031 exchange into another property and defer capital gains taxes that way. If you current first mortgage rates are very good then check with some lenders to see what ltv they go up to and their rates and go with the lender that meets your goals. Most of them max out at a combined ltv of 80% on helocs. You can check with your current 1st mortgage lenders to see if they do helocs.

Bryan C. · Answer

Thanks for the info @Nazz Wang

Bryan C. · Answer

@Chris Seveney, thanks I will look into it.

@Billy Guyette, thanks for the suggestion.  It is one I am looking into also.  Just trying to compare my options and make a decision going forward.

Billy Guyette · Answer

Why don't you out right sale a couple of the properties and consolidate up to a larger property. This way you get 100% of your equity out, instead of just 75% or 80%, and you have access to bigger deals.

Camille Pronovost · Answer

Hi Bryan, I am in a similar situation. I just purchased a SFR with a HELOC from my primary residence. I plan to do a cash out refinancing into  30 yr. mortagage after 1 year. I saw this link on another BP thread. Wells Fargo does commercial real estate loans. Here is the link:

https://www.wellsfargo.com/biz/loans_lines/real_estate/

Hope this helps!

Camille

Bryan C. · Answer

Thanks.  What about a portfolio loan?  I know very little about portfolio loans, but I would like come up with $100k to purchase 2 rentals, minor repairs, & have reserves.  If you were me, how would you go about getting $100k?