Banks gone mad! RENTS no longer count w/o 30% equity????

they wouldn't count my rental income if it hadn't been coming in for at least one full year.

I just had this conversation with my banker... Every bank I have gone to is looking for an equity position of 30% or more and they look to have the debt serviced by 1.25%... meaning if your expenses come up to 1000 then you monthly rental income needs to be 1250. this is just what I've run into, it doesn't mean its the case with every bank.

that has made America great is dead. Without any brainpower at the top of the banking food chain, it will really slow down the overall recovery.

I went to Suntrust Bank just a couple of days ago to see if we could pull some money out of a rental property that we own free & clear. We've owned it for 12 months, so it IS seasoned, have a 2 yr. lease with a $ 400/month positive cash flow; have $ 100,000 in their own bank; both of us have over 800 credit scores; houses appraises at $ 60,000. Now they said would
go 80% loan to value, but at a slightly higher rate, no problem, only wanted 70 to 75% ... they checked our personal & corporate tax returns & said since the rental income goes into the corp. & does not show up on our personal tax return, as far as they are concerned we have no rental income...so they would just go by our credit score & debt ratio & of course the appraisal.
Now being true REIs, what do we do ? We leverage everything to the hilt ... therefore our debt ratio is too high for them to give us a mortgage. Don't you just love it!

I'm curious, who all has found a bank to do no-season refis? I'm going crazy looking.

We had a banker come in for a presentation in early April. He said that his bank counted 75% of the rents towards your income with copies of the leases.

He said that they have just one branch that you can walk into. All of their other business is done via phone and internet.

Their aggregate is around $500k. If an investor gets close to this amount, the board of directors might be more hesitant to loan out more money. Higher amounts may be considered for members (people that have purchased annuities, insurance, etc.) .

They do loan out nationally.

They do inside loans, they don't have to sell their loans, so they can make up their terms for loans. For this reason, I would kinda consider them similar to a Credit Union.

If interested, please feel free to give Modern Woodmen Bank a call or e-mail.

wwww.MWABank.com

Again this info is nearly 2 months old and may have changed since then. And no, I don't work for them.

We found a small town bank in Indiana that will do no season refi. But they will only loan in that area of Indiana.

Steve.

Chris,
You are wonderful to share this information. Thank you. Some refuse to share in fear of competition. Its a mighty big pot out there, room for us all. I definately think if we stick together and help each other, we create success for all; we all give back; all win.

Steve and Veronica,
I was thinking of calling you about this - thanks for sharing.

This is what I was told. I have 3 properties from BEFORE I found Dean's methods and revamped my business. 1 has 25% equity, and I get $1695 in rents. They don't count even 1cent because I don't have 30% equity (even though it cash flows)... The other 2 are 1 that I bought in 2004, that has no equity (put 20% down, but its gone), but is not negative, and the other I bought in 1992 (my first primary residence) but I cash out refi'd back when it was worth $470K, but only to about 60% of its value because I wanted to be 'careful' (Lots of good that did... NOT). I am upsidedown on that one as its value is not only $240K to the tune of about $37K. Both of these, even though their rents cover the expenses, and the one with no equity, but not underwater, the rents can not be counted ($2375/month (cashflows) and $1485/month (small monthly loss). But, the expenses are still counted against us. This brings my DTI to the 81%. Oh brother. What a mess.

Tell me what one thing has to do with the other? How ridiculous!!! I've been getting rents on all of them, never had a vacancy since 2004! AHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!

It is bank to bank some will use rental income some will not. Some do no season loans and some do not. This is hard to understand.

Steve.

had ALLLLLLL of my rent NOT count... usually 75% counts; even in the 90s during the downturn or at any other point. That is not even LOGICAL. I can prove I've had the rents for the last 7 years, and now they want to say I don't have ANY of them because of EQUITY???? EQUITY has nothing to do with the rent I'm collecting!

Does anyone see a problem with this, or am I just crazy? So according to them, I'm making my payments on those properties, taxes and insurance out of my husband's salary and they are as good as sitting there empty in their eyes. Which is a DOUBLE whammy, because I have the EXPENSES and they don't count ANYTHING as covering them. (BTW, this is a portfolio lender through a mortgage broker)...

I'm going to post in my journal things I'm grateful for because I need to REFOCUS and keep being a thermostat about this.

Thank you so much for sharing Gangremond! I don't know if they'll do CA though. This is the MESSED UP, business unfriendly, tax happy, CWWWWWWAZY state!

that's what you get in Cali...
your rent only accounts for income when you do your taxes!

it's a no win situation with the large banks - stick with the smaller banks where you can get to know the people who make the decisions!

Valerie

This is a smaller bank. They say if I sell my house (that I live in) they'll give me the loan.

And, our REAL DTI ratio is 45%, that's what STINKS!

See, I have the rental income going into our LLC, but the way the CPA puts it on our taxes, it shows up in our personal Schedule Es. The problem on my loan isn't the house I'm refinancing; its the other 3 that I've acquired over the years that have proven themselves, one of them since 1997! In those 14 years, its been vacant 1 month, by choice, to rehab the property lightly. I can't believe this is REALLY what some banks are doing. I will NOT give up though. I don't know how they can't figure out that if I'm making the payment on a 14% loan, which is more than DOUBLE what my payment is with the refi, that they can't see I have income coming from somewhere.

Maybe I should tell them I have a money tree it all grows on...

of the money tree

is the title of the property under the LLC? why won't they make a loan to the LLC? just wondering...

Valerie

I agree with you on this one. Maybe she can at least check into it?

Have you ever heard of your bank NOT giving you a business account because of your credit? Wells Fargo does.

Valuni wrote:

of the money tree

is the title of the property under the LLC? why won't they make a loan to the LLC? just wondering...

Valerie

I am not sure; it IS under the LLC now. I've already garnered up several leads for more banks; my hubby found one too. This has been a 5 month journey now to find a lender that will do it. We've been told by MANY they can do it; and its ended with a 'yes, you're all approved' to a 'well, we have to now deny the loan because...... insert bs reason here. We've had 25 inquiries into our credit in the past 6 months with this darn loan.

Of course, now I've gone 10 steps backwards with hubby coming around, and that is the worst.

find a way around this. Trying to hook up with some more portfolio lenders, but I just had a long talk with another investor in the exact same position. It is literally killing him as well. It doesn't matter if you've collected rent from 20 years without once vacancy, they count 0, zip, nada, zilch of rents, but 100% of income. This investor's wife is even a RE attorney and there is nothing that can be done about this disastrous mess. They want to make sure we can afford ALL expenses w/o any rents at all; and this COMPLETELY destroys us; and keeps us in this ridiculous 14% loan.

WAY TO STIMULATE the ECONOMY whoever thought up this BRILLIANT idea. I am beside myself, but working on possible solutions instead of dwelling on it. I am in just such utter disbelief that I can't believe that this can even be legitimate. PINCH ME!

Good credit isn't all its chalked up to be guys. It really has no value whatsoever in today's market; its actually a hindrance to us; because if we were paying late on our mortgages, we'd have a better chance at getting reduced rates and expenses.

PS... What happened to the EDGE badges