cancel
Showing results for 
Search instead for 
Did you mean: 

I own 5 income producing properties with no mortgages - collateral??

Auto Loans for ANY Credit Situation. Immediate Response.
Advertiser disclosure

I own 5 income producing properties with no mortgages - collateral??

I've been purchasing rental properties for cash for the past five years since I cannot get a mortgage due to 2 baddies (less than $300 each and both will fall off by 2020) on my credit reports.

 

So now I have 6 units in 5 properties that produce a decent monthly income for me.

 

How can I use these as collateral for a mortgage, or even a personal loan of any type. By "any type" I really mean a loan with an APR less than 20%.

 

Most places I ask about this have no clue about how that would work, or they just say "we don't do that". I thought that lenders like it better if there is hard collateral, especially collateral that produces a monthly income, to secure their loans? So what if there are two utilities saying that I owe them a pittance from 5 years ago (I don't really, but try telling that to the CA's and the CRA's)?

 

I actually had a need for a very short-term $10K loan a couple years back, I tried a few places that said "we don't do that". I found that I needed a "hard money lender" and then figured I'd try a *pawn shop* with deed in hand for one of the properties. They came back with an offer for me to sign the property over to them (and pay all attorney fees, filing fees, etc.) and then loan me $3,000 at 36%, pre-computed with large origination fees. Needless to say, I walked out and kept the title to the property that was worth at least 10 times the amount they were offering to lend.

 

Any suggestions?

Message 1 of 13
12 REPLIES 12
Established Contributor

Re: I own 5 income producing properties with no mortgages - collateral??


@CheTanaka_is_MyIndianName wrote:

I've been purchasing rental properties for cash for the past five years since I cannot get a mortgage due to 2 baddies (less than $300 each and both will fall off by 2020) on my credit reports.

 

So now I have 6 units in 5 properties that produce a decent monthly income for me.

 

Any suggestions?


I'm really struggling in why someone would not give you a mortgage if you can purchase something 5 rental properties with cash.  I figured having that much cash in the bank would help?  Then again what do I know about mortgage lending.




FICOBeginning (6/2017)Current
Equifax636707
Transunion627725
Experian623726
Message 2 of 13

Re: I own 5 income producing properties with no mortgages - collateral??


@VoltaicShock wrote:

I'm really struggling in why someone would not give you a mortgage if you can purchase something 5 rental properties with cash.  I figured having that much cash in the bank would help?  Then again what do I know about mortgage lending.


But I don't have that money in the bank, it's in the houses now! Most of my cash goes to new purchases and improvements. I don't like to have large sums just sitting around, getting less valuable in a savings account.

 

I'd like to progress to purchasing more valuable property though, but in order to do that, I'd need to get access to credit, or save for a few years straight!

Message 3 of 13
Established Contributor

Re: I own 5 income producing properties with no mortgages - collateral??

It sounds like you are referring to your personal credit profile. Perhaps you should consider establishing business credit. It is not that difficult. You can browse the Business Credit Forums for useful information. Good luck!


Life was a lot simpler when what we honored was father and mother, rather than all major credit cards. ~Robert Orben

SCORES: Excellent · 830 to 848
INQUIRIES: 0
UNIVERSAL REVOLVERS: $200K Club
NUMBER OF CC ACCOUNTS: Less than 10
CARD USAGE: Minimal
CREDIT HISTORY: Very Lengthy · Seasoned Accounts
INCOME: Sufficient
UTIL: 1-2%
PYMTS: 100% Positive · Always PIF · AZEO
INSTALLMENTS: No thanks!
ASSETS: 100% Equity
TOTALLY REFUSE TO: Pay Interest or Annual Fees, Combine Accounts, Reduce Limits, Submit 4506-T, SCT, App Spree, Accumulate Inquiries, Do business with Comenity, Synchrony, Cap One, Wells Fargo, Citi, Barclays or any other credit-cancerous lending institutions
Message 4 of 13
Valued Contributor

Re: I own 5 income producing properties with no mortgages - collateral??

I would talk to a mortgage banker, not a broker.  I am in the process of purchasing an apartment to house the homeless with monthly expenses paid by churches.  My banker has not flinched at the business model.
CSR | Amex Platinum | EDP | QS (2)
Amex Blue Business Plus
Message 5 of 13
Super Contributor

Re: I own 5 income producing properties with no mortgages - collateral??


@CheTanaka_is_MyIndianName wrote:

I've been purchasing rental properties for cash for the past five years since I cannot get a mortgage due to 2 baddies (less than $300 each and both will fall off by 2020) on my credit reports.

 

So now I have 6 units in 5 properties that produce a decent monthly income for me.

 

How can I use these as collateral for a mortgage, or even a personal loan of any type. By "any type" I really mean a loan with an APR less than 20%.

 

Most places I ask about this have no clue about how that would work, or they just say "we don't do that". I thought that lenders like it better if there is hard collateral, especially collateral that produces a monthly income, to secure their loans? So what if there are two utilities saying that I owe them a pittance from 5 years ago (I don't really, but try telling that to the CA's and the CRA's)?

 

I actually had a need for a very short-term $10K loan a couple years back, I tried a few places that said "we don't do that". I found that I needed a "hard money lender" and then figured I'd try a *pawn shop* with deed in hand for one of the properties. They came back with an offer for me to sign the property over to them (and pay all attorney fees, filing fees, etc.) and then loan me $3,000 at 36%, pre-computed with large origination fees. Needless to say, I walked out and kept the title to the property that was worth at least 10 times the amount they were offering to lend.

 

Any suggestions?


IMHO you're just talking to the wrong people. It should be a no brainer to find a bank or credit union that will give you a mortgage collateralized by 5 income producing real estate parcels.

 

 


Total revolving limits 732500 (606000 reporting) 12/4/20 FICO 8 scores: EQ 715 TU 760 EX 735
Message 6 of 13
Legendary Contributor

Re: I own 5 income producing properties with no mortgages - collateral??

I agree.

The lendors you are speaking with likely only have experience and confidence in liens they can place on the same property that is securing the loan.

Being a different property complicates the lien process, and they likely dont have that experience or confidence in how that secures their investment.

 

 

Message 7 of 13
Moderator

Re: I own 5 income producing properties with no mortgages - collateral??

I also have a hard time understanding why you can't get a mortgage if the only bad things in your reports are two collections for less than $300.  What else is on your reports like positive credit lines.  You definitely can get a mortgage with just two small 'baddies' and they will pay them off as part of the mortgage.  For that part, I'd suggest you visit the mortgage forum where there are actually lenders that post and help others.

Message 8 of 13
Established Contributor

Re: I own 5 income producing properties with no mortgages - collateral??

 

 

On top of that I have my regular job, and thus I actually pull in about $110,000 a year.

 

http://ficoforums.myfico.com/t5/Mortgage-Loans/Options-for-people-who-have-too-good-of-a-tax-strateg...

 

 

* as stated above, you have a regular job, with documented regular income.

 

This should easily support your request to either a conventional Bank or Credit Union for a loan application, with an APR considerably under 20%.

 

as the previous posters have stated, your course of action is to contact either a Bank or Credit Union, based upon the data you have provided.

 

Best Wishes ! ! !

 


@CheTanaka_is_MyIndianName wrote:

I've been purchasing rental properties for cash for the past five years since I cannot get a mortgage due to 2 baddies (less than $300 each and both will fall off by 2020) on my credit reports.

 

So now I have 6 units in 5 properties that produce a decent monthly income for me.

 

How can I use these as collateral for a mortgage, or even a personal loan of any type. By "any type" I really mean a loan with an APR less than 20%.

 

Most places I ask about this have no clue about how that would work, or they just say "we don't do that". I thought that lenders like it better if there is hard collateral, especially collateral that produces a monthly income, to secure their loans? So what if there are two utilities saying that I owe them a pittance from 5 years ago (I don't really, but try telling that to the CA's and the CRA's)?

 

I actually had a need for a very short-term $10K loan a couple years back, I tried a few places that said "we don't do that". I found that I needed a "hard money lender" and then figured I'd try a *pawn shop* with deed in hand for one of the properties. They came back with an offer for me to sign the property over to them (and pay all attorney fees, filing fees, etc.) and then loan me $3,000 at 36%, pre-computed with large origination fees. Needless to say, I walked out and kept the title to the property that was worth at least 10 times the amount they were offering to lend.

 

Any suggestions?


.

05/03/16 Fico 8 Scores: EQ 546, TU 501, EX 548
09/01/16 Fico 8 Scores: EQ 662, TU 628, EX 657
10/04/16 Fico 8 Scores: EQ 692, TU 665, EX 686
01/15/17 Fico 8 Scores: EQ 706, TU 670, EX 687 * all Yellow / Good
Message 9 of 13
Valued Member

Re: I own 5 income producing properties with no mortgages - collateral??

What the OP states is true. I too, have rental properties with no mortgage. It is difficult to get a loan against a property with no mortgage. It is the most illogical thing ever but it has been confirmed for me by a lender. It has been awhile so I don't recall if the lender said that it could not be done or if it is difficult and I didn't need the money so I didn't press him. It is easier to get a second on a house with a mortage. In my situation, I used my good credit to get a personal line of credit. In a pinch, I would cash advance a credit card.

 

 

 

 

 

http://ficoforums.myfico.com/t5/image/serverpage/image-id/2760iB9166C1A493A3CBC/
Message 10 of 13
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.