How to refinance out of private money

Question

I constantly read about investors all over the country using private money to fund deals, and now that I have found a private money lender I'm curious about how to refinance out of the high interest rate that private money usually comes with. Now I only have one property so far so I know I can just go to a bank and do a traditional refinance, but my question is more specific to when I have used all the mortgages a bank will allow me (10) is the highest I've found. So my question is when I'm buying that 11th property and I use private money to purchase it, how and who do I refinance with to get a lower interest rate with a 30 year ammoritization? Thanks!

Michael Le · Answer

@Kyle Novak You amortize over a longer period otherwise you wouldn't likely cash flow. But the bank doesn't want to hold the note that long so you have the balloon.

Jerry Padilla · Answer

@Kyle Novak

Conventional lending only goes up to 10 financed properties, so you will have to do portfolio or commercial lending. I would take advantage of the 10 conventional mortgaged properties first and then go these routes. Terms and rates most likely won't be as great, but they are better than private lending.

Conventional financing for an investment is going to require an LTV of 75% for a SFR or MFR for a refinance, when you to refinance out of the private money.

Michael Le · Answer

@Kyle Novak you refinance or sell

Kyle Novak · Answer

@Michael Le so how would you pay that huge balloon without selling the property?

Billy Brown · Answer

This is the fun part!  What we do with our clients is refinance the portfolio and put the loans into 1 commercial note using our banking partners across the usa (Cross Collateralize). Sometimes we can cash out (that "debt" money tax free remember). Then we can go shopping! See my youtube videos on next steps and how to buy an apartment building. Also, this puts all the debt on the entity and off your personal credit.  The net income still passes through to you, all the expenses are on the entity.  Does that help? Congrats on the success.  If you want help with this taking to the next level and buying larger assets, let me know.

Kyle Novak · Answer

Thanks for all the comments!

Brian Ploszay · Answer

If you are an investor, there is no cap to how many properties you can finance.    My recent experience was that a bank declined to do further loans with us, suggesting that they did not want to be our only financier.  Went to another local bank.

Can you try Lima One?  They finance small rental properties and they are easy to work with.

Kyle Novak · Answer

ok so if it's an arm that means adjustable rate mortgage? So how often is it adjustable? And if it's a 15 year balloon doesn't that mean the balance is due in 15 years? So why is it ammoratized over 25?

How to refinance out of private money

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