Property Q&A in Oakland>Question Details

Carlitos, Both Buyer and Seller in San Francisco, CA

Pay Cash for 2-4 unit and then how much can I take out of it?

Asked by Carlitos, San Francisco, CA Sun May 20, 2012

If I pay cash for a 2-4 unit property (Investment, not owner occupied) how much of the price I paid can I expect to be able to take out of it immeadiately? I've heard 70% but would like to know if anything thinks it's possible to get 75% or even 80%.

How about a scenario where I take up residence in a 2-4 unit I pay cash for. Could I get 80% in that case?

thanks in advance

Help the community by answering this question:

Answers

8
BEST ANSWER
Hi Carlitos,

The maximum LTV for a Cash Out Refinance on a 2-4 unit investment property is 70% and 75% for owner-occupied.

FHA will allow 85% cash out on an owner-occupied property.

You must have a six (6) month history of ownership of the subject property to be eligible for a Cash Out Refinance.

Properties acquired by the borrower within the 6 months preceding the application date of the current refinance transaction are ineligible for Cash Out, unless the property was purchased by the borrower with no financing. To be eligible for a cash-out refinance with less than a 6 month history of ownership, all of the following restrictions shall apply:
1. The new loan amount must not exceed the actual documented amount of the borrower's initial investment in purchasing the property.
2. The purchase transaction was an arms-length transaction.
3. A copy of the HUD-1 for the purchase transaction is required and must not reflect any financing used to acquire the property.
4. The title report must not reflect any liens on the property.
5. The source of funds used to purchase the subject property must be fully documented.
6. If funds were borrowed to purchase the subject property, those funds must be repaid and reflected on the HUD-1 Settlement Statement for the new loan.

Best regards,

Elva A. Wormley
C2 Financial Corporation
2845 Moorpark Avenue, Suite 209
San Jose, CA 95128
0 votes Thank Flag Link Mon May 21, 2012
Thanks Elva, that was exactly the kind of authoritative detail I was looking for! I will likely give you a call to chat more if you don't mind.

To the previous question on why pay cash if you are going to turn right around and finance? Good question and I'd prefer not to do this but I am getting beat out by too many cash buyers. I was even the highest bidder in one case and the sellers went with an all cash offer lower than mine. So I feel like I need to do this to be competitive.
0 votes Thank Flag Link Mon May 21, 2012
Hi Carlitos, I'm glad I was able to answer your question. You can reach me in the office at 408-615-8500, Monday - Friday 10:00am - 7:00pm, usually!
Flag Mon May 21, 2012
Why would you pay cash in the first place? A purchase money loan is usually better than a refi - cash out. As an owner occupied purchase you can pay as little as 5% down, if your DTI is within certain limits. I had clients who paid 25% down to buy non owner occupied. Tell me why you buy all cash in the first place. There must be good reason.
Antoine
0 votes Thank Flag Link Mon May 21, 2012
according to this the 6 month waiting period on cash out re-financing doesn't exist anymore:
http://www.american-apartment-owners-association.org/blog/20…

anyone have any details on this?
0 votes Thank Flag Link Sun May 20, 2012
I know at least one lender that will let you do a 50% cash-out refi 6 months after purchase, but most others will make you wait 12 months and limit you to 70% loan-to-value. Cash-out refis also result in higher interest rates, so keep that in mind.

Let me know if you would like to be connected to the "6 months later" lender, and best of luck in your search.
Web Reference: http://plattinc.com
0 votes Thank Flag Link Sun May 20, 2012
I know at least one lender that will let you do a 50% cash-out refi 6 months after purchase, but most others will make you wait 12 months and limit you to 70% loan-to-value. Cash-out refis also result in higher interest rates, so keep that in mind.

Let me know if you would like to be connected to the "6 months later" lender, and best of luck in your search.
Web Reference: http://plattinc.com
0 votes Thank Flag Link Sun May 20, 2012
I believe that Bill is correct. You may have to wait to refinance as well. We deal with some great lenders - contact info below if you would like referrals. We also deal with representing buyers on this type of purchase all the time in addition to having bought a number of them for my own account.

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes Thank Flag Link Sun May 20, 2012
Most lenders require non owner occupied properties to have 30 percent skin in the game. 25 percent may be a possibility but an unlikely 1. Check With your lender. They will have the most accurate information. best of luck to you
0 votes Thank Flag Link Sun May 20, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer