I own 4 places outright but my credit is shot

After a nice run of investing and purchasing over 25 investment properties 2008-2010 smacked me in the face hard…I had 11 places beginning in 2008 and by the time 2011 rolled around I was down to 6…

(1) of those is my primary residence,
(1) is a3 unit brick building I own outright
(3) are single families that I own outright
(2) foreclosed in 2009/2010 and (1) will be foreclosed on within the next 90 days

My credit score is in the 575 range, down from 757 at my peak ( miss those days :-), but I would like to pull cash out of these places. I’ve owned them all for a minimum of 2 years, they all cash flow, and I’ve been employed at the same place for 15 years. I’m rebuilding the credit slowly but I would guess on the conservative side I have 200k in equity in these places. Aside from Hard Money is there any other way for me to pull cash out? I’m not thirsty for cash so I can sit on them and collect the 4figures a month I’m getting but I would love to get a lump sum and purchase more places cash at low numbers. Is deeding the place over to someone else who I trust without a shadow of a doubt and letting them do a cash-out refi and option? Just curious… THanks

My philosophy is to never (I know, I know…never say never) have properties with no mortgage on them. I say that because on the balance sheet if the property has no mortgage you have money in the dirt and buildings but not as cash in your pocket. You don’t pay the mortgages the tenants do so you see there is no downside to having mortgages. Another benefit to keeping the property mortgaged is that it is generally easier to refinance than to get a new mortgage if you need additional cash. Also the algorithm that creates your credit score makes your score higher if you have mortgages than if you don’t have any (assuming that you pay your bills). So your score will always be high as long as you have mortgages on your credit report. That is probably why your score has dropped from the 700’s to the 500’s. Big businesses always have debt on their books because it is the smart thing to do not because they love debt. We should not reinvent the wheel. Debt is good for businesses and real estate is a business.

What I would do is ask your local mortgage broker (not bank) what your options are. Make sure you use a mortgage broker that is investor grade. Investor grade mortgage brokers are brokers that deal a lot with investors. He is probably not the guy that advertises in the local homes and land magazine. He is not the guy that spends all his time doing mortgages for families trying to buy personal residences. I also suggest a broker instead of a bank because he will go across all available options and be able to suggest to you the best avenue for you to pursue.

Blue Moon thanks for the feedback awesome… A couple of points of clarity though…

I have the places with no mortgages b/c I bought them cash and rehabbed them out of pocket. Also the dip in the credit score was a direct result of the 4closures. I managed to flip over 20 of the places I bought and with the profits, despite not being able to get the mortgage, I decided to double down and pick up places at .20cents on the dollar…

I’ve had my personal home loan for 9 years and that plus a couple of secured cards to help me start the rebuilding process, but I’m at a place now where until the credit bounces back, I’m in a position where I can make most major purchases in cash…

I agree having no mortgage does absolutely nothing for me as far as cash in my pocket. I’m going to see what I can come up with and would like to speak with you or email with you directly after i hear back if that’s ok…

The USDA loan program is a popular option for people who have had a short sale or foreclosure in their past because it is one of the mortgage programs with the shortest waiting periods and most flexible underwriting guidelines. The waiting period for a USDA loan after a short sale can be as little as 2 months in the right situation.

With a foreclosure, the waiting period is 5 years up to 7 years. If you have extenuating circumstances-- typically situations beyond someone’s control, like a job loss – it can be cut down to 3 years.

Fannie Mae has just upped the length of time it takes from the completion of a foreclosure sale until the borrower can get a new mortgage from four years to five years.

Perhaps the best option for obtaining a mortgage after foreclosure is with a federally insured FHA loan. The minimum time between the completion of foreclosure until when you can be approved for an FHA loan is three years – whether or not there are extenuating circumstances. Still, FHA borrowers will have to show that they’ve been practicing good bill-paying habits since the foreclosure.