We own 7 units of residential rental properties outright, and we need to free up some equity for our flipping business. I'm putting together a financing presentation in a binder to hand out to local banks. What does a local bank want to see as far as ratios, financial statements, background, etc.?
So far, I have the following:
Previous 2 years of tax returns for the LLC as well as the individual members.
Income Statement and Balance Sheet for LLC
Key Financial Ratios
Property Profiles w/ Pictures (similar to the BP Rental Property Calculator)
It wouldn't hurt to provide a personal financial statement see example below,
also an executive summary, copy of you credit report, and a list of "real estate owned", google parentheses to find a sample pdf.
You might also want to inquire about a blanket loan for your properties as well as a business line of credit.
In the lending environment were in now post Dodd-Frank 2010-2013, you are in for a long road to hoe with conventional financing for cash out refinances on investment properties. If you are bound and determined to go this route, be prepared for lot's of documentation gathering, appraisals, rent rolls, reserve requirements, DSCR 1.15-1.30 +/- and not much fun.
If you would like to talk about alternative funding sources "outside the banks", let me know.
All we need is one year tax return, 2 months bank statements showing 6 months PITI, we do not look at DTI but DSCR, PM with your email address and I will send you my rate sheet.
Loan Purpose Rent-and-hold
Term 30 years
Amortization Fully amortized
Rate As low as 6.9%
Points 4 pts.
Closing Fee $1,250
Min. Property Value $80K
Min. Credit Score 630
Property Condition C1-C4
Max LTV 75%
The most common roadblack we see in cash-out financing with the convention loans (FNMA / FHLMC) is one person Is limited to cash out on 4 financed properties. If I understand correctly you have 7 free and clear properties you are looking to tap equity. As long as you don't have any other financed properties you should be able to get cash from a Conventional lender on 4. If you have any financed properties in addition to your 7, that will cut into the ones you can get cash out on.
For instance. If you have a loan on your primary and 7 free and clear investments, you can get cash out on 3 investments bringing it to a total of 4 financed properties. You can still purchase up to 6 more with financing for a total of 10 financed props. The cash out is where the limit is. If we want to go further into guidelines, one can pay cash for each additional acquisition and pull the cash out up to 70% of the full value within the first 6 months of ownership under the FNMA "Delayed Financing" program, but if you go past 6 months you cannot take the cash out.
There is a lot to all this. If you would like to go into detail about how this can be accomplished for your personal scenario, let me know what are some good times and number to connect verbally.
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