Hello everyone,
Hope all is going well, and i also hope someone can help me answer this question… In a nutshell, I have a deal on the table that will allow me to buy, fix up and cash-out no seasoning refinance within 90 days. My tax free cash out should be about $15,000 realistically, at which point i would rent the house out (preferably on a lease/option)
MY QUESTION IS: If i can find a lot of these deals, can i do a few every month? I know most lenders won’t let you have more than 4 loans out at one time. This limits me, i can go to other lenders but i hear the limit is like 10 total. How do i get around this? Can i buy them in my companies name and build a huge portfolio that way?
After residential loans are originated, most are sold off on the secondary market to Fannie Mae and Freddie Mac. This includes loans originated by brokers through wholesale lenders or retail branches of large banks. Fannie Mae and Freddie Mac set guidelines which the lenders must conform to if they plan on selling of their loans (thus you get “conforming loans”). Part of the guidelines restrict clients from owning more than 10 financed 1-4 unit properties. These are the loans that offer the most attractive rates. Although the guidelines allow for up to 10 properties, many lenders will cap their own exposure to 4. Using several lenders may be required to reach your first 10.
If you need high ltv financing or have gone over the “10” limit then there are portfolio/alt-a loans offered by those same lenders. AltA loans are not sold off to Fannie or Freddie on the secondary market, instead, they are sold off to other wallstreet investors who have set their own lending guidelines. These are not subprime loans which are typically reserved for credit challenged borrowers. Alt A rates are slightly higher than conforming loans but still will allow for great cash flow.
There are a handful of lenders that will allow you to own an unlimited amount of properties and have no maximum that they will do themselves.
For AltA products you’ll need a minimum of 620, higher if you need high ltv or reduced documentation.
Thanks Ben 8)
Antoher question. I’m not familiar with Alt-A loans, can i cash-out no seasoning refinance on theses too? Also, can i buy ore transfer theses properties to a corparation and therefore take them off my personal limit?
Once again thanks for you guys insight into this. ;D
There are a handful of alt a lenders that will cash out with no seasoning.
All of the residential lenders that were previously mentioned, conforming or alt-a will only write loans in the name of an individual. There are a couple of AltA lenders however that will allow you to have the vesting of title set up as a LLC. The LLC paperwork needs to be reviewed and there are other restrictions, such as 80% ltv and full doc or stated only.
Just because a loan is title in the name of the LLC does not mean it’s taken off your personal liability. The credit would still be in your name. If you want financing in the name of the LLC to get them off your personal credit then you’d need to speak to a bank for commercial financing.