How to do a cash out refinance; WITHOUT it being a cash out refinance

How to do a cash out refinance; WITHOUT it being a cash out refinance

Well, on my year long refinance journey, I learned one very valuable lesson by making a big mistake. A 5th financed property doesn't allow cash out. But, there's a way around that. I did it wrong, or I'd have my $40K out of the house I put into it, but I made one mistake.

What you can do to assure you get paid cash out when you refinance out of hard money is called a wrap around mortgage, or all inclusive trust deed (AITD). Laughing out loud BUT, this is where I made my mistatke. I attached my AITD 2 months AFTER I bought the property. For it it be considered a rate and term refinance, and NOT a cash out refinancing, it must be done at the same time you purchase the property.

So, in my case, I bought my property $199K. HML out here do not EVER lend w/o skin in the game. So, I had to put in over $40K into the house (It ended up being over $65 K due to taking so long to refi out of hard money). So, my LLC bought the house, and I personally fronted the money. I make the AITD out for $242,500 and then do a refinance for $242k,500; and the cash comes back to me. I suppose you could also attach a 2nd on the property as well as a trust deed and have the same effect; but the key here is to do it the same date you close on the property.

Even though I did mine 2 months after I bought the house, there were some lenders that still counted it as a rate and term at $242,500; HOWEVER; the majority said it would be a cash out because it wasn't taken out at the same time as the house was bought.

This is ESSENTIAL when you go for property 5+, because regulation do not allow cash out on investment properties past the 4th one. Tidbits of information you may like to know for your future investing. Learn from my mistakes and creativity. Laughing out loud

It is CERTAIN we will succeed!

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thanks for sharing Tammy

appreciate you posting this great info; one question, could you do one cash out loan with two properties at once, so that it wouldn't count as two loans?

also, how do you get the loan refinance to match the closing date on which you would be paying cash?

learning and progressing every day,
Valerie

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Valerie

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Hi Valerie

Right now the way the banks are, they check if you have more than one refinance or purchase going on at the same time.

I'm not sure I understand the 2nd questions, but I think you mean recording the ATID or the 2nd (which is actually held by yourself personally or your company). You just record your AITD or a second with the county the same day the title company records. Make sure title has recorded it before recording yours. Its simple to record the document by going to the county recorder's office with the document.

In my case, I had my AITD wrap around the HML. Had I did it right, I'd have $40K to work with right now. Sad

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Couple Ideas

When you work with banks you can find smaller banks doing re-finances are different.

Different in which ways? All.

Some will some won't to just about everything. One thing that has helped me is creating an business proposal. This proposal identifies all pitfalls, opportunities and strengths.

Presenting this to banks seems to open our opportunities.

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Nate

Thanks for the comments. I did call over 1000 banks; and I submitted my business proposal as well as my paperwork to over 250 of them. Many portfolio lenders. The way my CPA did my taxes, they took the bait and switch 9 pts and put in on my taxes, which made my company show a great loss; and that made me unlendable even to portfolio lenders.

They are eager to see my 2011 taxes, but with the 2010 showing such a large loss, there wasn't a bank I found that would loan to us the way we were doing it. I had to go off the loan to cut the business losses by more than 1/2 and we had to get cosigners for the first time in 22/25 years. CA is a crazy state as well; lender environment here is really, really harsh; even with portfolio lenders; but I have a lot of them to work with once my 2011s are done! Smiling I can't wait to goto them with my taxes! Any recommendations on REI friendly CPAs? My last CPA really let me down. Sad

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Come and see my video! SEND ME AWAY 2011 WINNER!!!! http://www.deansmedia.com/play.php?vid=243
Follow my JOURNAL (journey) here: http://www.deangraziosi.com/real-estate-forums/investing-journals/99510/...
Checkout my websites: www.zionpropertiesandinvestments.com
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“The way to get started is to STOP talking and to begin DOING!!!" ~Walt Disney
By humility and the fear of the LORD are riches and honor and life ... Proverbs 22:4.
SUCCESSFUL PEOPLE DO IT WITH A HEADACHE! (~Dean Graziosi)


Good Stuff Tammy

This is the kind of stuff you don't hear much about. But this knowledge is invaluable.

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... Verses: 35 "but those who hope in the Lord will renew their strength. They will soar on wings like eagles; They will run and not grow weary, They will walk and not be faint." Isaiah 40:31 ...


Thanks Chris

I'm still looking for a REI friendly CPA that can minimize my deductions better than the last CPA did. But, because I did it wrong, maybe someone else can benefit from doing it right.

All the best,
IT IS CERTAIN we will SUCCEED!!!

~Tammy

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Come and see my video! SEND ME AWAY 2011 WINNER!!!! http://www.deansmedia.com/play.php?vid=243
Follow my JOURNAL (journey) here: http://www.deangraziosi.com/real-estate-forums/investing-journals/99510/...
Checkout my websites: www.zionpropertiesandinvestments.com
Please come to my fb page and LIKE me: www.facebook.com/WeBuyHousesHonestly
“The way to get started is to STOP talking and to begin DOING!!!" ~Walt Disney
By humility and the fear of the LORD are riches and honor and life ... Proverbs 22:4.
SUCCESSFUL PEOPLE DO IT WITH A HEADACHE! (~Dean Graziosi)


Thank You Tammy

For sharing your experience.

__________________

Kurt A. Conway, MSHA, President
The Conway Financial Group, LLC
Real Estate Investor
kurt@tcfghomes.com


Thank You Tammy

For sharing your experience.

__________________

Kurt A. Conway, MSHA, President
The Conway Financial Group, LLC
Real Estate Investor
kurt@tcfghomes.com


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