I have been reading and pouring over this website and could not locate the answer to my question. I am new to real estate investing and have a question about refinance. I have excellent credit and six figure income to service debt. My strategy is to buy wholesale investment properties, renovate and refinance for long term cashflow. I have two questions for you:
- How difficult is it to refinance a hard money?
- Is there a lending ceiling for the amount of refinance? For instance, will lenders stop me from accumulating investment properties even if I my DTI is low with the increased mortgage from my investments?
- Has anyone heard of dohardmoney.com? Are they reputable?
I am located in DFW and any information would help.
Thanks and keep up the good posting.
Hitthegroundrunning :guns
Wow where do I start? Your approach is all wrong in my opinion. The idea is to invest small amounts of money to get big returns. What you are suggesting is to buy with hard money and pay the hard money lender a portion of the profits and then refinance and then pay the bank a portion of the profits. Will there be any left for you? With a 6 figure income I would suggest that you purchase once and hold the property for cash flow. Hard money is only used for rehabbing and selling to retail buyers, or flipping or wholesaling to cash buyers. You only want to borrow hard money when the time period will be short as in a few days or weeks, with built in profits and buyers lined up. You can purchase foreclosures for very reasonable prices save up a few bucks and by it for cash, rehab it , then turn it over to a property manager for cash flow and do another. It will not take long to build a portfolio to be completely financially independent.
Redhawk
Thanks Redhawk. I was trying not to use my cash reserve only in certain cases. Buying up properties with your cash will diminish it quickly.
Thanks
hitthegroundrunning (sounds like an old Indian name–you had a quick birth?!),
If you want to keep as much cash as possible, your lowest downpayment will be for an owner occupied property. If you buy a 4-unit unit, it should still be easy enough to get a loan. It won’t fall into the commercial category.
Now you move into the worst unit, and start fixing up the other units one by one. Put in some great landscaping. Raise the rents on each renovated unit as you put it up for rent.
Soon the rent on the three units is paying for your one unit. You are living free. You can save your income for the downpayment on the next building. All the while you are gaining property management and rehab skills. You will make most of your mistakes on that first building. If you keep buying and rehabbing you become an expert. Every month your tenants are buying your building for you.
That is just one path among many. Find the plan that you like, and good luck.
Furnishedowner
To answer your questions…well lets hope I understand what your saying by refinancing a hard money loan?
I assume that your meaning the property was bought with a hard money loan and now you want to refinance and pull cash out via a loan with better terms. If you plan on keeping the property, which it looks as though you are, then you do really need to get rid of the hard money loan used to purchase. As to if pulling cash out is a wise thing or not, well you shouldnt be able to get into to much trouble there as the limitation on a non-owner occupied cash out loan is typically 65-70% LTV these days, and certainly much lower rates than hard money.
Regarding your question as to if there is a limitation that lenders will impose on you as to how many properties you can own. Lenders have guidelines that limit if they will do a loan for you based on how many properties you own. The industry standard is 4 properties max. but there are other lenders that will go to 10 max. and few lenders that will go beyond that. I’m not saying owning more than 10 properties is a bad thing, but getting financing will get tougher to find the more properties you own, so it will take some searching to find your financing options after that. I would love to help you out if your interested, just pm me and I will get you from point A to point B