Buying rentals with Cash, best options?

Question

I am getting about 200k in in the coming weeks this money is coming in from an investment outside my current job.

I have been looking a condos in the Tampa florida area.  Due to the high inventory of foreclosures you can pick up units from between 20-45k.

I would like to pay cash for these units and then pull the cash out and use it to keep buying more knowing that I wont be able more than 70-75% of my cash of each unit.

What is the best way to go about this?

Kyle Meyers · Answer

I have recently bought a few properties with cash and cannot pull anything out with a refi. I have talked to about 20 different lenders, but they don't want to do the loans. There are many lenders that refuse condos, others will refuse loans under $50k, and many will require you to wait 6 months to a year before you pull any cash out. Also, be advised that you will not be able to use the rental income from the properties you will be buying to qualify for the loans until you have 2 years of tax records showing the rental income.

Nick J. · Answer

Welcome!

first things first is quit telling people how much money you have.

Your thinking is on point but I would also consider contacting a local/regional bank and see what they're requiring to do re-fi's, heloc's etc....

Make sure you don't get crazy and spend it all though. Keep a lot of it as a padding.

Mark D. · Answer

I meant to mention that you could refi for the new appraised value with 6 months seasoning or refi for 75% of original purchase price right away.

Mark D. · Answer

I agree that you will have a difficult time funding a condo right now.

If you have a deed of trust recorded on title for the amount you purchase the property for, you should be able to do a rate and term refi based on a new appraised value (assuming you rehabbed the property)at 75% LTV.  If you are okay with leaving some of the $ back in equity, you could rate and term for 75% of purchase price.  In other words, you could borrow private money from an entity that you control or a friend or relative in order to refi and get your $ back out. At least this is what has been working for me.

George P. · Answer

ditto on all of the above. if you were not in tampa, i'd say "no to condos". but i know what florida is all about. lived there for many years.

unless the economy changes, noone will refi your condos. so, get a loan before hand and use the money for something else. you's still have to use some of it to put the downpayment anyway.

Matt T. · Answer

As others have already stated, many people are having a difficult time finding lenders willing to do cash out loans on non owner occupied (NOO) residences.  Do some leg work ahead of time to see if you can find a lender willing to do it.  I've found one specific to my area but they require ownership for a minimum of six months before they consider it.

Also, the fact you are focusing on condos could make for additional problems.  Many condo projects are "off limits" for bank financing.  Banks often require a minimum percentage of units to be owner occupied.  The number of vacant units and investor units will hurt you.

Bryan Hancock · Answer

Hi Jesse...welcome to BP.

Have you spoken to a small regional bank?  Getting purchase money debt may be a good solution instead of trying to pull your cash back out on a refinance.  My guess is that many lenders won't want to go through the effort to make loans that small...especially as refinances.  You'll almost certainly have to leave 20%+ in your own cash in each project too.

Maybe one of our resident brokers can comment and give some better advice.

Buying rentals with Cash, best options?

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