Real Estate Investor · Greenwell Springs, LA · Member since 2013 · 37 posts · 2 votes
Currently renovating my first BRRRR property and looking for a bank that will let me cash out 75% LTV without a 6 month seasoning period...anyone have someone local I could use? I'm getting no's everywhere. (some national, some local)
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
9y
@Chad Mayo yeah, you will not have success with a "conventional" lender. Meaning a lender that uses Fannie Mae or Freddie Mac (if you recognize those names) to govern their mortgages. The good thing is that most banks will have "portfolio" options. Meaning, money that comes from their own portfolio of funds. Those loans are regulated by the bank itself. So each and every bank's portfolio loan will be governed differently from the next bank's portfolio loan. In order to find your loan you will literally have to call each and every bank. Or, reach out to some brokers about the loan type. Caution, brokers may not have a relationship with every bank so you may STILL have to call all the banks. And I'm being literal here. Calling 200 banks is not unusual for most investors. Even seasoned investors are always looking for better financing options. Smile and dial. Hope this helps.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
9y
@Chad Mayo could you provide some numbers for us please? Did you buy the home with cash or with a loan? If you did buy with cash, what did you pay for the property? How much do you think the property is worth now?
Real Estate Investor · Greenwell Springs, LA · Member since 2013 · 37 posts · 2 votes
9y
@Jeremy Stroud I have not tried them yet. Have you used them before?
@Andrew Postell Sure thing...I paid $57K for the property. Used cash from a HELOC on my personal residence. Will be putting the rehab on some 0% interest credit card and/or cash. Rehab will be about $30K. The ARV for the 3Bd/2Bth 1,350 sq. ft. property is $145K.
Baton Rouge, LA · Member since 2017 · 19 posts · 5 votes
9y
I recently used them for a commercial loan to purchase some investment property, It wasn't specifically for renovations or anything. But they were pretty easy to work with and helpful along the way.
Worth a shot. I worked with a guy there by the name of Josh Prejean if you want to ask for him.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
9y
@Chad Mayo yeah, you will not have success with a "conventional" lender. Meaning a lender that uses Fannie Mae or Freddie Mac (if you recognize those names) to govern their mortgages. The good thing is that most banks will have "portfolio" options. Meaning, money that comes from their own portfolio of funds. Those loans are regulated by the bank itself. So each and every bank's portfolio loan will be governed differently from the next bank's portfolio loan. In order to find your loan you will literally have to call each and every bank. Or, reach out to some brokers about the loan type. Caution, brokers may not have a relationship with every bank so you may STILL have to call all the banks. And I'm being literal here. Calling 200 banks is not unusual for most investors. Even seasoned investors are always looking for better financing options. Smile and dial. Hope this helps.
Investor · Baton Rouge, LA · Member since 2014 · 280 posts · 219 votes
9y
@Chad Mayo Baton Rouge has more banks than you would believe that will do the type of loan you are looking for. You are not likely to find a 30 year fixed loan, but you can find a 20 year loan with a 5 year balloon at interest rates around 5-6% right now. Get on Google, look for all the smaller community banks that have a small number of branches and call them, speak to a loan officer and ask what types of loans they are currently looking to make on residential investment property. You will find a bank that will work for your needs because there are a LOT of them in town and in the surrounding small communities.
Go ahead and steer far clear of the big banks like Capital One, BofA, Regions, Chase, Wells Fargo, etc. They mostly sell government backed mortgages that get sold off to other Fannie and Freddie backed institutions.
My advice to you is to prepare a financing package where you have already compiled everything they may ask for to qualify you including the information about your property, the rehab, market rents for the neighborhood, etc. Make multiple copies and walk into multiple banks and speak to their lending officers. After you do this, chances are you will find out you have several choices and you can select the one with the best terms.
Sounds like you you are on the right track and I believe you are going to be very successful with this first deal and you will get the bug and be ready for the next 10 deals to hurry up and come your way. Reach out to me if you have any trouble with this, but it should not be too difficult. Do you have a full time J.O.B.? That really helps in this situation.
Real Estate Investor · Greenwell Springs, LA · Member since 2013 · 37 posts · 2 votes
9y
Thank you @Brandon Johnson. That makes a lot of sense and I understand I have to crawl before I walk. I do have a current job...I am the Hearing Examiner for the Louisiana Real Estate Commission and Appraisers Board.
Real Estate Investor · Greenwell Springs, LA · Member since 2013 · 37 posts · 2 votes
9y
Are there any "typical" loan terms for the cash out refinance from portfolio lenders? I've spoken with a few banks and they both offered 5/20 with a "balloon". That kinda worries me but they said it's simply so that they can review financials and the renewal process is simple in five years.
Real Estate Investor · Greenwell Springs, LA · Member since 2013 · 37 posts · 2 votes
9y
Quick question for you guys about refinancing in my personal name or LLC. I'm wondering how my credit score will be affected with additional properties and use of 0% credit cards for renovations etc. I don't want to hurt myself on future refi chances. Do y'all have preferences of putting properties in personal name or LLC?
Investor · Baton Rouge, LA · Member since 2014 · 280 posts · 219 votes
9y
@Chad Mayo almost all of my loans are the 5/20 balloon you mentioned. Unless you have a major change in your credit or you make late loan payments, it should not be a problem to renew these loans. At the end of year 4 you can talk to the banker to make sure nothing has changed and come up with some backup plans in case they do so you will be prepared.
My experience has been that maxing out your available credit will be a detriment to your credit score, but as soon as the debt is reduced or eliminated the score will rise right back up. This has happened to my score repeatedly as I max out personal credit lines to repair properties. I use LLC's for my properties except for one I own in my personal name because I used to live in it and don't want to mess with the financing that is in place now.
Real Estate Investor · Greenwell Springs, LA · Member since 2013 · 37 posts · 2 votes
9y
Thank you all for the help. I would like to update my list again. I previously used Bank of Zachary and I now have three properties and would like to branch out to other banks because I can see a point in the near future where BofZ feels they've extended too much to me. Does anyone know of other local banks that would offer 75%-80% cash-out refinance with a 5/20 ARM? I was able to secure this with Bank of Zachary but in checking with several others, I only get the option of 75% cash-out with 5/15 ARM.
Real Estate Agent · Baton Rouge, LA · Member since 2019 · 84 posts · 33 votes
7y
@Chad Mayo Hey Chad...I'm in the Baton Rouge area as well. Just getting started down here. How did your BRRRR deal go that you touched on 2 years ago here? Did it go as planned? How did the bank financing go with Bank of Zachary. Were they pretty easy to deal with?
Real Estate Investor · Greenwell Springs, LA · Member since 2013 · 37 posts · 2 votes
7y
@Brian Mackey It went very well. Reach out to bank of Zachary and speak with Lyle Matherne...tell him Chad Mayo recommended you. I've had several deals with them and they have been reasonable and quick. Currently, I have two properties with BofZ with 5/20 terms at 5.75%. However, those were not recent closings so not sure what terms are offered currently.
Baton Rouge, LA · Member since 2018 · 11 posts · 10 votes
7y
Replying to the original post:
I looked into this not long ago and the Bank of Zachary and Essential Federal Credit Union were the two local banks I talked to that would do a cash out refi without the 6 month seasoning and based on the appraised value after being renovated.
I didn’t look into other local banks but I’m sure there are more that will as well.
You basically can’t do it with any lender that needs to follow the Fannie May guidelines in order to sell the loan on the secondary market.
Real Estate Investor · Greenwell Springs, LA · Member since 2013 · 37 posts · 2 votes
7y
These recent posts have me thinking again about this topic. I have a 3bd/2bth home that is in my LLC name and I'm thinking of doing a cashout refinance to my personal for the 30 yr fixed rate. Does anyone have a connection to a local bank that will do an 80% cash out with 30yr fixed rate? Any bank willing to do the 30yr rate with LLC?