UnThreaded | Threaded | Whole Thread (21) | Ignore Thread Prev Thread | Next Thread
Author: kook79 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127815  
Subject: Consolidating Mortgages Date: 12/10/2012 3:12 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Board,

So I have multiple rental properties with multiple mortgage loans with multiple lenders. Is there a lending vehicle I can use to consolidate it all into one nice loan? I'd need anywhere from $750K to $1M. I've been trying to refinance a few of them but no one has a way for me to do it.

Thanks borad.
Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124458 of 127815
Subject: Re: Consolidating Mortgages Date: 12/10/2012 3:15 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
What kind of properties do you own? Single family? Condos? Apartment complex? Multi-unit? (If so, how many units?) Strip mall? Office building? Commercial?

The kinds of financing available will vary depending on the kind of property you own.

--Peter

Print the post Back To Top
Author: 2gifts Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124459 of 127815
Subject: Re: Consolidating Mortgages Date: 12/10/2012 4:10 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 6
Why would you consolidate all of them like this? I would prefer to keep them separate for a bunch of reasons.

- it is easier to track expenses and things like profit and loss to a property if I can segregate all the expenses to that property, including the mortgage interest.
- if a house is sold, you are still left with paying the full mortgage payment because that's how the payment was calculated. You don't get to take the money from the sale and pay off that mortgage. Even if you use the proceeds to pay down the mortgage, your payment is the same as though you still owned the property.
- if you have financial difficulties and face foreclosure, the loan is secured by all the properties instead of just the one to be foreclosed.

I can see where it is easier to make one payment, but I'm not so sure I'd be rushing to put all the properties into one financing bucket. But maybe that's just me.

Print the post Back To Top
Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124460 of 127815
Subject: Re: Consolidating Mortgages Date: 12/10/2012 4:31 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Hi borad,

Is there a lending vehicle I can use to consolidate it all into one nice loan?
Well, yes... but they are small business commercial loans, and the terms are nowhere near as preferrable as standalone residential loans available on 1-4 unit properties (assuming you are referring to 1-4 unit rentals.)

2gifts' warnings are very valid... but if that's not enough to put you off, the commercial terms to do what you are asking would be;
1) Technically an 80% LTV limits... however
2) 1.25% DSCR, maximum... which on 1-4 unit rental yields generally translates to a loan-to-value maximum of 50-60%
3) amortizations of 10, 15 or 20 years (nothing for 30,)
4) balloons at 3, 5, or 7 years (no fixed terms longer than these,)
5) SBA rates in the 3.9% range unless you are a white male, then 4.9% (who said racism isn't alive & well in banking!)

Although these *can* be done on residential or mixed portfolios... they really generally only make financial sense on commercial rental portfolios.

Luck!
Dave Donhoff
Leverage Planner

Print the post Back To Top
Author: CCinOC Big funky green star, 20000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124461 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 2:44 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
What the OP is describing is a blanket mortgage.

http://www.trulia.com/mortgages/Blanket,TX/

Print the post Back To Top
Author: kook79 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124462 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 8:50 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Board,

Thanks for all of your comments. I have 4 rental properties and my wife has 1 with a shared principla residence. This year, I've been attempting to refinance all of the rental properties and my main mortgage to try and make them cash flow better. One property is especially sticky. I have a rental that brings in 1250 a mont in rent but I am paying a fixed rate 7.5% int only for 10 years and then principal is getting added for a 20 year loan, for a total of 30 years. The payment right now is $1,436 and will bump up $600 in the next 2 - 3 years. I so want out of this loan and the tenet's are long term renters so it wouldn't be best to try and sell it. Here is a break down.

Primary House 1: int rate was 5.75/30 now 4.175/20
Rental 1: 5.175/20 (refinanced 3 years ago)
Rental 2: 7.25/30 now 4.5/30
Rental 3: 7.5/30 10 iti becomes 7.5/20 piti
Rental 4: 5.5/30
Rental 5: 5.75/30

I also cannot purchase any more rental properties as I have reached my limit and some banks will not let me refinance becuase I have exceeded my limit on rental properties. If I want to purchase more rental properties, then I need to do something with the 4 that I have and the 1 that my wife has.

Thank you all again for your input.

Print the post Back To Top
Author: kook79 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124463 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 8:52 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Peter,

They are mostly single family detached homes but one is a townhouse.

Print the post Back To Top
Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124464 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 11:51 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Hi borad,

One property is especially sticky.
Why? What are the hurdles you're bumping into in getting this one refinanced?

I also cannot purchase any more rental properties as I have reached my limit and some banks will not let me refinance becuase I have exceeded my limit on rental properties. If I want to purchase more rental properties, then I need to do something with the 4 that I have and the 1 that my wife has.
You don't specify what your "limit" is, specifically.... is it that you don't qualify due to sufficient total income?

The limit on financed properties (through FNMA/FreddieMac) is 10, including your personal residence, so you're not constrained there.

How else can we help?
Dave Donhoff
Leverage Planner

Print the post Back To Top
Author: kook79 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124465 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 1:06 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Dave,

The bumps that I am running into are:

1. The LTV on this one property is about 95%
2. BAC says that I cannot do it since they have a policy about how many home loans you can have
3. I've gone as far as to try and do a modification on it, but they told me that I:
a. Make too much money
b. Am current on the loan
c. Don't seem to have any issues making the payment

I've been up and down this thing thing for the past two years and I cannot get anywhere with it. Looking at business loans is my thinking outside of the box. I would like to consolidate all of them under one loan with an interest rate of between 3.5% - 4.5%.

Thanks for any assistance.

Print the post Back To Top
Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124466 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 1:18 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
2. BAC says that I cannot do it since they have a policy about how many home loans you can have

You need to talk to someone besides Bank of America. I'd suggest talking to a couple of other banks and an independent mortgage broker or two.

Do any of your properties have significantly less than 80% LTV? If so, you could refinance one of those, taking a bit of cash out. Then use that cash to get the troublesome property down to 80% LTV.

At any rate, you're not going to get a single loan for all of your properties anywhere near 4%. I'd hazard a guess that even if you could do it, you'd be looking at something closer to 10%. Using a separate loan for each property is the way to go.

--Peter

Print the post Back To Top
Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124467 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 3:40 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
... What Peter said... except that cashout on a rental is capped at 70% on SFRs, lower on multiple-door units (2-4-plexes.)

You'll probably tear your hair out sorting out an equity rebalancing plan to get the best rates & terms across all your properties. This is a case where a good broker is valuable (and I am decidedly *not* self-pitching here... your kind of case is a hair-puller... my own portfolio is similar, and its a royal PITA for me when I do my own financing!)

Dave Donhoff
Leverage Planner

Print the post Back To Top
Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124468 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 4:25 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 5
I have a rental that brings in 1250 a mont in rent but I am paying a fixed rate 7.5% int only for 10 years and then principal is getting added for a 20 year loan, for a total of 30 years. The payment right now is $1,436 and will bump up $600 in the next 2 - 3 years. I so want out of this loan and the tenet's are long term renters so it wouldn't be best to try and sell it.

Why not?

You are paying interest only on the loan, and are still cash flow negative by almost $200/month on just the interest, not including prop taxes, insurance and repairs/maintainance? Absent any rental rate hikes in the next 3 years, you will become $800/month cash flow negative by then on just the loan, not including everything else?

Even if you were able to refi the current balance at, say, 4% on a 30 year fixed, your P&I payment would only drop to about $1100/month - probably a bit more if you finance in your closing costs, so let's say $1125. That leaves you with $125/month to cover property taxes, insurance and maintainance/repairs just to break even.

Seems to me that this is actually a pretty marginal property from a cash flow perspective, especially given the inability to refinance away from the current loan without dumping more cash in. Even if you were willing and able to dump more cash in to refi, it still looks somewhat marginal - with today's rates, rental properties should really be at least break even after considering all costs. I would suggest looking at selling this property (maybe to your renters), and seeing if you can get into another property that actually has some potential for positive cash flow, if you want additional properties.

AJ

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post Back To Top
Author: CCinOC Big funky green star, 20000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124470 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 9:38 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
kook wrote: I also cannot purchase any more rental properties as I have reached my limit and some banks will not let me refinance becuase I have exceeded my limit on rental properties.

You can finance up to 10 investment properties at Flagstar (retail).

Print the post Back To Top
Author: CCinOC Big funky green star, 20000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124471 of 127815
Subject: Re: Consolidating Mortgages Date: 12/11/2012 10:02 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Kahuna wrote: I own all of my real estate investments inside a partnership LLC. The partnership buys the properties and obtains the mortgages.

Conforming loans are not allowed on partnerships. The property must come out of the partnership, an individual signs the loan, and then the property can go back into the partnership.

Print the post Back To Top
Author: wasmick Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124472 of 127815
Subject: Re: Consolidating Mortgages Date: 12/12/2012 1:20 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 2
What the OP is describing is a blanket mortgage.

http://www.trulia.com/mortgages/Blanket,TX/




As opposed to a single family loan in Blanket, TX?

Print the post Back To Top
Author: kook79 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124473 of 127815
Subject: Re: Consolidating Mortgages Date: 12/12/2012 2:00 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
AJ, good to see you again on the boards. Remember I used to hang around the consumer debt board. The LTV on this property is 95% and I've offered it to the tenets more than once for purchasing but they enjoy renting it right now. If I were to sell it, it would probably go for less than what I owe plus closing costs and agent fees. I do have my real estate license and would sell it myself, but the fees that add up to unloading a property and horendous. I have an appointment with a bank today to talk about this property outside of the BAC and regular commercial channels.

Talking to my financial mentor, I told him that I guess the best thing for me to do is hound my millionaire friends and see if anyone wants to loan me the money to do the refi and thus they would own the mortgage. No response.

kook

Print the post Back To Top
Author: inparadise Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124474 of 127815
Subject: Re: Consolidating Mortgages Date: 12/12/2012 2:20 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
I've offered it to the tenets more than once for purchasing but they enjoy renting it right now.

Can you raise the rent? If they enjoy renting, perhaps it is because the rent is too low. Double check to make sure it is not under market.

IP

Print the post Back To Top
Author: CCinOC Big funky green star, 20000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124476 of 127815
Subject: Re: Consolidating Mortgages Date: 12/12/2012 5:02 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
kahuna wrote: I am always the Managing and controlling General Partner of the partnership.

Then you're signing the loan docs and are responsible for repayment of the loan. That's fine.

Print the post Back To Top
Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124477 of 127815
Subject: Re: Consolidating Mortgages Date: 12/12/2012 6:08 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Small quibble;
Conforming loans are not allowed on partnerships. The property must come out of the partnership, an individual signs the loan, and then the property can go back into the partnership.

Conforming loans *ARE* allowed on DIRECT partnerships, where every partnering owner applies and is individually approved fully, for joint & severable liability, on the mortgage. The property may be required to be vested to each of the partners (or not, depending on the ramifications of the local laws to the lenders.)

Conforming loans can also be made to the individual partner/members of an LLC that owns the real estate being collateralized... although its something few lenders care to take on. When it *IS* done, the property vesting must usually be titled out of the LLC and into the various borrowing partner's names for the closing/recording of the new loan & liens, after which it can be re-titled to the LLC... however this can sometimes trigger a significant excise tax event, depending on the jurisdiction.

BOTTOM LINE; Its usually not as simple as it can be imagined.

Dave Donhoff
Leverage Planner

Print the post Back To Top
Author: CCinOC Big funky green star, 20000 posts Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124478 of 127815
Subject: Re: Consolidating Mortgages Date: 12/12/2012 11:40 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Dwdonhoff wrote: Conforming loans *ARE* allowed on DIRECT partnerships, where every partnering owner applies and is individually approved fully, for joint & severable liability, on the mortgage. The property may be required to be vested to each of the partners (or not, depending on the ramifications of the local laws to the lenders.)


Right...just like husband and wife. The partners are co-borrowers.

Print the post Back To Top
Author: kook79 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 124479 of 127815
Subject: Re: Consolidating Mortgages Date: 12/13/2012 12:06 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
inparadise,

Rent is comparable to the market.

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (21) | Ignore Thread Prev Thread | Next Thread
Advertisement