Need some help. My wife and I have a small portfolio of five investment properties, four purchased with conventional home loans, the other through a redirected IRA. Most of them have been owned for at least 5 - 6 years, and given the prices we picked them up at, the work put into them, and the increasing value, we've built up a fair bit of equity in them.
We recently came across another property we've become very interested in, and though we used up all our available savings buying/rehabbing the other properties we have so much equity built up, particularly in a couple of them, that we thought we could take a second loan for 40k on one of the properties to help put down 10% on the place we're interested in and use the extra for the rehab work - it needs a fair bit, but than that's my specialty. Given the current market we're not even close to tapping out the equity in the home property we want to borrow against - if we sold it tomorrow we'd walk away with at lease 150k.
Unfortunately we've run into a bit of a brick wall with the bank we approached, Wells-Fargo, who hold the pink slip on the house we were going to borrow against. They insist that we put 20% down on the property we want to buy, plus take out an interest only loan. I think we can do better than that, not least because the bank tried screwing us royally 6 months ago on a car loan - we got much better interest and terms elsewhere. This from a bank that holds the mortgages to all our properties bar one and which we've done business with for some years now.
Can anyone suggest some alternatives or at least give us an idea of what we can expect from other lenders? We'd really like to buy this property, though not by screwing ourselves financially or painting ourselves into a corner.
@Tim Wilderbeeste Have your ask WF why they are offering interest only loan? 2nd bank who has other properties how they calculate your DTI. You have to ask for more information from both banks so you can understand why there is difference in offer. You have short term goal for the next property like rehab and sell so better approach will be take out HELOC if possible.
Wells Fargo isn't the worst, that spot is reserved in my heart for Bank of America. But WF is right up there. Talk to local and regional banks and/or just lots of banks and credit unions. Someone will lend to you if what you are saying is true.
Hi Edward. Absolutely no argument there with regard to BOA - we hate the bank with a passion. We borrowed from them for our own home about ten years ago and they were a nightmare to deal with. I got so enraged over their behavior (long story) that I ended up putting up a web page devoted to all the crap we had to deal with from them. Some VP ended up dealing with us to try and make it all go away. We were thankful that the loan got sold on to WF some years ago as they have been easier to deal with.
@Harjeet. You're confused. There's only one bank involved, Wells-Fargo. Not sure where you came up with two. Furthermore I'd think my original post would have made it reasonably clear that we're buy and hold investors. That's why we're having issues with the way Wells-Fargo is trying to structure this. Thanks all the same.
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