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peter
4617 Posts |
 Posted - 08/08/2008 : 1:40:20 PM
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My customer owns 4 rental condos free and clear with
a combined market value of about $580,000. He would like
to cashout about 50% of all these condos but has asked me
if there are lenders who will do a crosscollateralization
loan whereby several or all of his properties will be
encumbered by the new note. He said that some federal
credit unions are offering this type of loans to their
members.
Anyone has the knowledge and experience in doing a
crosscollaterization loan for residential properties?
Please comment. Thank you.
Peter
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aaron1976
631 Posts |
Posted - 08/08/2008 : 8:23:45 PM
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It is available hard money with the high rates and points to go with it. If you are unable to locate a conventional lender, my investors can probably take it down. Where are the properties located?
Aaron Cirlin
818-590-4288
aaronc1976@hotmail.com |
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bestbet123
1577 Posts |
Posted - 08/08/2008 : 8:25:27 PM
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| That's a really big word,i can't hang. |
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dkendall1979
10298 Posts |
Posted - 08/08/2008 : 8:56:22 PM
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| Orange County Business Bank does Cross-collateralized home loans. |
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crankyusi
660 Posts |
Posted - 08/09/2008 : 07:56:02 AM
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Why are you doing a "cross"? Looks like a cross would be a $290k first against all 4 properties? Why not do 4 individual $72,500 loans, one loan per property? Problems with a cross (from the borrower's point of view) is that if borrower relies on rental income to service the debt, and if one property goes vacant, that could jeopardize the ability to pay the "cross" and all 4 properties could be lost in foreclosure. Whereas, if there is one separate loan per property, only the vacant property would be lost in foreclosure while the other 3 performers continue unaffected.
Also, if the owner decides he needs some liquidity and wants to sell only one property and there's a cross, he'll need to contend with getting a release of that one unit from the lender (unless a predetermined amount is agreed to).
That's the basics of why I'd stay away from a cross. |
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peter
4617 Posts |
Posted - 08/09/2008 : 09:37:06 AM
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Francis, thanks for your input. I entirely agree with
you and I will advise my borrower accordingly. His idea is
to save on the closing costs and to maximize his cashout
for all the 4 rental condos, but as you said should there be
a vacancy his cash flow would be affected and if one of these
rental condos would go into foreclosure it would create liens
on the other 3 condos as well. It is better to refi and cashout
one by one.
Another reason is that my borrower plans to sell some of
these 4 rental condos to his tenants, and the "cross" would not
make an FHA purchase loan under "Identity of Interest" concept
possible as any one of the condos he will have sold to his
tenant will be cross-encumbered with the other 3.
Thanks for sharing your concepts and thoughts with us.
Peter |
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crankyusi
660 Posts |
Posted - 08/09/2008 : 10:11:54 AM
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quote:
Originally posted by peter
Thanks for sharing your concepts and thoughts with us.
You're welcome. Glad it made sense. |
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