Cash Out on 5-10 Financed Properties After This Weekend

6 Replies

This weekend an update to the automated underwriting system that lenders use is going into effect.  It's going to evaluate multiple financed properties differently, and will be removing the restriction on cash out for over 4 financed properties.  This means that cash out on 5-10 financed properties is going to be a reality for loans that will be sold to Fannie Mae.

Hopefully quite a few lenders will be updating their guidelines and offering this right away.  Great news for investors that want to refinance and take cash out of investment properties!

Wow, can you expand on this? how does this help and investor with 10+ properties?

Hi @Meghan McCallum

It'll help you because now it'll be easier to stay BELOW ten financed properties. Remember, we're not counting properties here. We're counting residential real estate that has one or more mortgage on it.

Example.

  • You own 13 financed properties. 
  • You have enough equity that you could shove all the debt into 8 properties by doing a few cash out refinances that pay off the mortgages on properties 9-13.
  • Properties number 11-13 are probably crummy commercial financing, ARMs, at higher rates, anyways, so it would behoove you to trade that debt in for Fannie 30 year fixed anyways.
  • On top of the above, this would be excellent for you because not only did we trade in commercial financing for Fannie, you could also buy two more properties using Fannie money until you re-hit the cap of 10 financed properties again.

Gotcha...unfortunately...I left the work force and getting Fannie loans is practically impossible for me. Commercial loans are my route. Unless I can refinance out of cash purchases more easily than buying.

Hi @Meghan McCallum ,

I only lend in CA, but know that rental income counts as qualifying income. You can get a mortgage without a W2 job. Landlording is itself a job.

Is it capped at 70% LTV, and I'm assuming you have to wait the 6 month seasoning period to do this? Right?

@Asher Anthes It follows the standard cash out requirements, so 75% LTV for single family homes and 70% LTV for 2-4 units.

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