Rental Property Investor · Marietta, GA · Member since 2016 · 23 posts · 10 votes
Hello,
I have a property that has been paid off. Its current value is less than $50K. I have tried to cash out the equity in the home but have been told that it could not be done as the bank will only consider loans with ARV of $50k or higher. Can anyone speak to this and make suggestions on other options I could take to pull cash out of this property?
A first position HELOC will probably be the easiest way to pull out money without paying a substantial portion of the money in closing costs. Some banks will do it, many will not (especially on rental homes). Send out more inquiries. I would prefer one with a low interest, no closing cost, and longer draw and repayment period. Ten year draw and fifteen year repayment might be possible with some banks. It will be easier to qualify if you live at the property.
If you have any other properties then you can also look at getting a commercial mortgage for multiple so that you meet their minimum threshold but be prepared to pay 4,000-5,000 in closing costs out of the proceeds of the loan. Typical commercial mortgage amortization is 20-25 yrs and 5% interest that may adjust every 5 years.
@Jassem A. Thank you for your rapid response. I will look into a HELOC. Besides asking if the bank will do the HELOC on the proprerty/properties. Are there any other specific questions that you think I should ask?
If anyone has recommendations for the banks that are more inclined to work with those in the below $50k rentals, I would love the recommendations.
I was just approved for a $40,000.00 loan. Not much but also got unlimited AmX card with no limit. I established a relationship with a bank that turned me down twice for loans. Credit score of 700 is almost magical. But, they still may require collateral. I did it because I still work and can pay the note from my salary, should all else fail. I am a little tired of so much work but, I want a steady 10,000 a month from R/E before I quit work. Failure is not an option. Nobody asked me. This is how I did it. Gain trust.
@Don Clay, was this a local bank you used? Was the $40,000 based a property that you currently own or a signature loan? My problem is I can purchase the properties, rehab them but lost with regard to the refinancing piece. I have an eye for a good deal and using the property in creative ways. However, I need a little more hand holding and guidance in securing financing. I just purchased "The Book of Investing in Real Estate with No Low Money Down" and will be educating myself as much as I can.
Thanks Clay, I will also add trust to my things to do list!