How to Safely Refinance a Rental Property So That You Can Buy More

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Күн бұрын

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Episode 14 - What if you already own multiple rental properties that have equity (i.e. they are worth more than you owe) and you want to refinance them, pull cash-out, and buy more rentals? What's the safest and smartest way to do that? Coach Carson tackles that question and more in this edition of Ask Coach TV.
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Пікірлер: 55

@vestor101 3 жыл бұрын

I use to worry about the 10 property rule Coach Carson discusses when it comes to financing. Once you reach 10 properties, evaluate your portfolio & 1031 into Beach rentals or more expensive properties. I took 10 & consolidated into 5 properties that produced solid income & also gave me more room for loans. Remember most banks will "Cut you off at 10" but they do not cap you at how much you can borrow for each property. You can own 1 property at million or 10 at 100k. The bottom line is the banks look at the number of loans, not the dollar amount of the loans.

@CoachChadCarson 3 жыл бұрын

Good feedback and strategies, Douglas! Thanks for sharing.

@WendyMaysIHouseofFI 3 жыл бұрын

Excellent advice. We purchased our first 4 properties as a package and they are a commercial loan. The balance is not very much (> than $70k now) our 5th bought with cash and are refinancing it now to pull the cash out. You've made me rethink the commercial loan and consider paying it off.

@CoachChadCarson 3 жыл бұрын

Thanks for watching, Wendy! There's always a lot to think about with the financing. But that means there are usually opportunities to optimize a little more!

@elan3studio765 5 жыл бұрын

Thank you for your insight.....

@CoachChadCarson 5 жыл бұрын

Thanks for watching!

@ericwebb8273 2 ай бұрын

Love to have you as my personal coach 1 on 1

@Maxdalova 3 жыл бұрын

Good work boss! You are a good teacher!!

@CoachChadCarson 3 жыл бұрын

I appreciate that, Loteh! Thanks for watching.

@matthewward8444 Жыл бұрын

Do you recommend using heloc or saving to purchase?

@stpierrefamilymovies 4 жыл бұрын

Great content on your channel. Thanks. Question. Should I refi 2 paid off houses a the 4.5% rate and hold the money for a year or two while waiting for prices to soften or just wait till I find a house then do the refi? Also, What loan to value ratio do you recommend for the refi given that our market is still red hot in the 160K price range? Thanks ~Jerry

@Wakaflockaflank Жыл бұрын

What did you end up doing?

@jerrystpierreofficial Жыл бұрын

@@Wakaflockaflank refinanced the two houses and bought 7. Now it's debt snowball time.

@sergioaguinaga9619 4 жыл бұрын

Good video! I have a question. When doing BRRRR during rising interest rates, does refinancing still make sense? A higher interest rate with a higher appraisal value would make the monthly mortgage payments likely to either not cash flow or negatively cash flow. So how would you adjust your equity amount such that you have a certain cash flow amount? For example, instead of taking the full 80% LTV, you take only 60% but generate 300 in cash flow/month, or you can do 70% and generate 150/month in cash flow. How do you go about this trade off of less cash flow but more risk vs more cash flow but less money taken out if any, essentially leaving more money into the deal and not being able to repeat the process. When do you choose to do which and why?

@ewlinitis 2 жыл бұрын

Raise the rent if possible.

@anthonydooley3616 Жыл бұрын

There are portfolio loans or lines of credit that a person with 6 properties could borrow up to 75% of the equity. The only way I would do that is to buy more income producing property . I would add value to those properties and increase rents, which increases value/equity.

@jonb3189 3 жыл бұрын

Just watched another R/E KZfaqr who advocated to never pay a penny more of your mortgage than you have to, and that every five to seven years you cash out refinance of each property. The logic is that here you have your money working best for you. To me, this appears risky. What is your opinion? Personally, I have six properties, three are paid off, and the rest in different stages of getting paid off. Was going to do the cash-out RiFi on the condo which would give me say $200K. However, if Refi the house I would get $270K, and then can pay all cash for my next property. Thinking of refi'ing the house instead. Am not comfortable doing too many cash-out refinances.

@badape3106 4 жыл бұрын

Hi coach, good video. How do you solve the problem of DTI if you do a cash out refinance? And use it to buy more. Wouldn’t there be a point where you can’t buy more due to DTI?

@CoachChadCarson 4 жыл бұрын

Great question. At some point I think that and reserves do become a stopping point for a lot of lenders. But in the commercial lending world, at least, they often look at the property itself and the cash flow it produces. And if you have conservative debt coverage ratios, you will be ok because the rent on each property is income that keeps your DTI in line. But this is not my expertise. A good mortgage broker can tell you better than I can.

@brianmiller5074 5 жыл бұрын

Thanks for the knowledge. I am a IT professional looking to get into real estate in the near future. I have no knowledge but I see it is a great way to build wealth. Can you provide some good books to help me get started as a newbie the correct way. Thanks again and if you have a video on this topic I will eventually find it.

@CoachChadCarson 5 жыл бұрын

Hey Brian, check out my podcast episode #45 - The Top 10 Real Estate Investing Books For Beginners: www.coachcarson.com/coach-carson-podcast/.

@CoachChadCarson 5 жыл бұрын

And I also wrote an article about same thing: www.biggerpockets.com/blog/2015/11/13/7-real-estate-books-beginner-investors/

@wernercardenas5540 4 жыл бұрын

Hello my name is Werner and currently I live in Florida. I only own 4 properties which one is pay off and I got an equity loan for $123000 out of this house. With some cash plus some money I pull out of the equity I purchased another property which at this point it is full pay off. I would love to get another home equity line of credit but I dont know how since i became a self employ

@elsan.6742 3 жыл бұрын

Hi Werner, were you able to overcome your challenge getting home equity? Currently I'm in the same situation. Any tips?

@Youtube_ban_me Жыл бұрын

do you have a video on how to find banks with no seasoning requirements??

@CoachChadCarson Жыл бұрын

Unfortunately I don't. But thanks for the question. I know some of my students/podcast listeners have found mortgage brokers who have lenders who will do less seasoning. My suggestion is posting on the BiggerPockets forums or asking around with local investor friends.

@Youtube_ban_me Жыл бұрын

@@CoachChadCarson thanks Carson!

@robertogutierrez636 4 жыл бұрын

I’m 24 do you recommend getting a mortgage on my first rental that’s worth 100k or try to purchase in full price?

@CoachChadCarson 4 жыл бұрын

Hi Roberto. I have personally used mortgages as long as I could cover all of the expenses PLUS have a big cushion of cash flow. If you can do that, it's reasonable to get a mortgage. But I also know some people who like to pay all cash and just wait.

@davidswain4502 4 жыл бұрын

Hey Coach, I'm having trouble getting guidance on the actual financing process for rental properties. Your recommendations make perfectly good sense, get a 30 year mortgage and stay away from the Business Commercial loans that have 5 & 7 year balloons, but what I'm hearing from the banks is that the "non-owner occupied" properties (with a few exceptions for maybe a 2nd home) do not qualify for the standard 30 year mortgage. I have one property titled to my LLC and one in my personal name. Both mortgage lenders I spoke to would not consider either property for a standard fixed 30 year (Quicken Loans & First Citizens Bank). They said these are commercial business investments (which they are). This was not based on my credit, LTV or anything else specific to me. As a matter of fact, I was just asking questions and had not provided any specific information. Any help on finding lenders that will offer the better mortgages?

@CoachChadCarson 4 жыл бұрын

Hey David, I know other investors who have got 30-year, fixed-interest loans on rental properties in the last month. So, it's definitely possible. But I would have thought Quicken Loans would have that product. I'd try another lender or two and keep asking how it can be done because Fannae Mae and Freddie Mac, the big mortgage buyers, do have programs for investor buyers. I'm sure it's more strict today, so you will need to expect to have larger reserves, higher debt-to-income requirements, etc. Best of luck!

@davidswain4502 4 жыл бұрын

@@CoachChadCarson Thanks for the reply. Any chance of finding out where those investors you know found the 30-year, or non-ballon options? I'd love to connect with some of those people to inquire. Are their properties in an LLC? Who was the lender? I just heard back from Reliant Bank and they told me the same thing. Properties in an LLC will always be considered as Commercial Lending with shorter terms and a balloon. Thanks, David

@charleskennedy8326 4 жыл бұрын

@@davidswain4502 Coach must have missed your comment regarding the LLCs as it's a well known fact that if you have the property in an LLC you are SOL in getting financing. What many investors do is get a loan in their personal name, and will then transfer it to an LLC. The risk there is the lender can technically call the mortgage due (as you are transferring title), but they hardly ever do so as long as the mortgage is getting paid. What I am doing is keeping them in my name and getting an umbrella policy now that I own a total of 8 units across 4 properties. These are the two standard methods.

@gdubaut 4 жыл бұрын

@@charleskennedy8326 Big Thanks for your reply. This is the answer I was looking for. I created my LLC and was going to transfer tittle into the LLC, and then refinance. Glad I came across your comment. Thank you! And Thanks Coach for your content.

@CoachChadCarson 3 жыл бұрын

@@gdubaut Thanks Charles. Yes, I did miss the LLC comment. Most banks do want the property in your name personally to get 30-year financing.

@deborahmiley2919 3 жыл бұрын

If we have a mobile on our five acres with our home that is a rental, and it is not deeded to property but considered real property we are having issuing refinancing our home with two addresses on same tax lot. Our county has it as two separate tax lots one for the mobile as real property and then one with our home and all the land. But our bank turned us down for financing due to that.

@CoachChadCarson 3 жыл бұрын

That is definitely a challenge. If you fit outside the box even a little bit, many banks don't want to loan you the money. If I understood it correctly though, you have two lots. So, I wonder if you clearly showed that there are 2 separate properties AND if your property without the mobile home appraises for enough on its own to get the loan, it seems like that should work. I would keep calling other mortgage lenders and explain that situation to them.

@asianinvestor15 3 жыл бұрын

Hi coach , can I refinance my mobile home owns land rental property? Or it's only for condo and single family home! Thank you

@CoachChadCarson 3 жыл бұрын

Financing for mobile homes is not my expertise. But my second hand experience is that it'll be more difficult to get a loan on a mobile home and land than a single family home or condo. This is especially true if the mobile home is older. I would ask around with local banks and savings and loans, who might have more flexibility.

@asianinvestor15 3 жыл бұрын

@@CoachChadCarson thanks coach

@rickeyalyles7609 3 жыл бұрын

if the property was deeded to me can it be finance or the house has to have a mortgage

@CoachChadCarson 3 жыл бұрын

If I understand the question right, I think you are asking if you got a deed - like in an inheritence - can you finance it. In that case, yes. As long as you own it you can borrow money against it

@rickeyalyles7609 3 жыл бұрын

@@CoachChadCarson Is there any other way we can build business credit beside net 30*s Im buying things i feel like im wasting money because bank account getting lower . Is it another way to build business credit ?

@hollyramos8461 3 жыл бұрын

How much income does the bank need to see on taxes for a refinance on a cash buy property? I don’t think my past couple years are high enough but I want to make sure I file higher this year I just need to know a # I have plenty of money I just want to get the line of credit

@CoachChadCarson 3 жыл бұрын

It's hard to say exactly how much you income need. They will look at a ratio called your debt-to-income. Each lender can tell you about their specific criteria, but they may, for example, say you can't exceed 40% debt payments as a % of your income. If you have an existing rental, make sure to document all the rental income and leases you have as well as the actual expenses. If you make a good case, that net rental income will help you qualify.

@HV-ie8vo 5 жыл бұрын

Any local lenders you recommend?

@CoachChadCarson 5 жыл бұрын

It depends on where local is for you. I would start with the non-national banks in your area.

@sidshri6080 2 жыл бұрын

Coach, so if you pay off 5 out of 10, are we still in the 10 home cap???

@CoachChadCarson 2 жыл бұрын

Do you mean the 10 traditional mortgage cap? If so, then 5 free and clear properties and 5 financed properties would still allow you some more traditional mortgages. There are also other 30-year mortgage options these days. I am sharing some of the lenders at www.coachcarson.com/investment-property-loans/

@sidshri6080 2 жыл бұрын

@@CoachChadCarson thanks Coach

@NeedsMoreToys 3 жыл бұрын

No bank that I have found will give a traditional residential 30 year loan on a rental property. I would like to know how you are pulling that off.

@CoachChadCarson 3 жыл бұрын

Where have you been asking for the loans? Sometimes local banks don't broker investment loans and you need to go to a mortgage bank or broker who specializes more in that. I suggest starting at a local real estate investing meetup or on BiggerPockets in the local forums and ask people there which broker they're using. You can also ask a real estate agent who has helped other investors buy properties. They will know the lenders who can get it done. Good luck!