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MindTrap028
January 22nd, 2008, 03:48 PM
Is it possible to have multiple real estate properties bundled into one loan.

Hypothetical.
Say 3 houses worth 200K each.. Currently with 130K loan on each.
Consolidate into 1 loan for 360K.

Is it possible?
Assuming the situation would have enough equity, would it free up 1 of the properties from having a loan on it?

Apokalupsis
January 22nd, 2008, 07:30 PM
Being in the real estate industry, specifically finance (residential and commercial lending), I can respond.

Short and Sweet Answer:

No.

Long-winded Answer:

One of the primary reasons is the liability to the bank. Each property will be different and have different conditions for closing. The bank needs assurance that the loan will be repaid. One of the assurances is the lien on the property. It's all about minimizing risk. Having 3 properties on a single loan is a high risk. If you don't pay, the bank now captures 3 properties. Banks aren't in the business to own, maintain and sell properties (it's work and costly). They are in the business of lending on property, that's how they make their money.

Also, a part of that "lending" process is selling your loan to other lenders. Today's market prefers a cookie cutter, vanilla finance program. Not only does such a 3-in-1 not exist, but it is quite a radical financing plan. It's far too risky.

Also, each property requires title insurance, fire insurance, property taxes, etc... and mixing them all is impossible.

Now, if you had 3 loans at $130K on 3 properties worth $200K ea, you may certainly refi on one or two against their equity to pay off the 3rd entirely. But 1) your interest rate will go up on both remaining loans due to the higher loan to value (LTV), 2) it is going to cost you (in fees) for each loan, 3) you will never get 100% financing on them in today's market (it was a challenge to get 100% financing in investment properties when the market was good). That program does not exist in today's market.

The fees + the lower LTV possible + the higher rate = less money for cash-out. It's possible (in your specific scenario) that you wouldn't get enough back to even payoff the 3rd property entirely. And since your payments would increase substantially for the other 2 properties (higher LTV and int rate) and due to the cost in fees for the refi, there's a very good chance that you may not be saving money month to month and instead, be losing money.

MindTrap028
January 22nd, 2008, 07:54 PM
Short and Sweet Answer:

No.

I kinda figured that.


Long-winded Answer:
Thanks that is very helpful.

My uncle said he was going to talk to the bank about a multiple package deal... so.. I figured I'd ask. (I probably got my answer before he will, thanks to the 24 hour ODN service Hot-line)

With the interest rates going down, I will be looking to refinance, if the numbers work.
(3/4 % today.. granted the Fed rate and all that; but a trend seems to be forming)

Apokalupsis
January 25th, 2008, 07:59 AM
A quick correction here...it is still true that your uncle cannot do the deal he is wanting (1 loan on 3 properties)...however, one of my AE's advised me of a new FHA program that allows up to 150% LTV (95% max on first) by using a subordinated 2nd loan. There are some funky guidelines to qualify, but it is possible. Not everyone fits into every package though...and this is definitely not for 2nd homes or investment properties (primary residences only).

Lastly, while I work primarily on CA loans, we are licensed in other states and may be able to help. Even if we are not licensed in that particular state, I can at least review the deal and GFE (Good Faith Estimate) for you (or anyone else) and let them know if it is a good deal or not. If it isn't, and my explanation makes sense, and I'm not licensed in said state (thus cannot help with your loan directly), I can at least provide you with a coupe quality lenders in your immediate area (I have a huge contact database through my company that ranks high quality lenders based on their productivity, longevity, customer feedback and other traits).

In short, DO NOT find your lender via the Yellow Pages (or something similar). Do NOT find your lender (or even Realtor) blindly. Get a referral! It's very, very important if you want the best deal and be taken care of properly.

I can do this for free.

MindTrap028
January 25th, 2008, 09:10 AM
A majority of the family are involved in construction. For the past 8-10 years, we have been dealing with "Synergy Bank". They have handled all of our loans, in house financing etc.

Still, they have their own thoughts of how my finances should go. For example, I expressed that I would like to build 2 rental properties in one year, as soon as possible. They expressed why they had reservations about that. (Sound reasons to be sure, but it was based in their best interest not mine.) While we haven't asked them any questions yet my uncle, my dad, and my self, will soon need to evaluate what is out there, and what we can do. Especially because of interest rates downward trend.

I am personally about 3 months away from any real decision, as I am in the middle of construction. While my uncle is a lot further along as he has a larger rental base than I do.I'll probably be fallowing his lead to some extent.
Whatever we do, it will be "Investment property" specific.

After I finish construction, I am almost certain I have enough equity (between multiple properties) to pay off one building.. Either my personal home, or a rental.

Of course I appreciate all the help, and advice.

starcreator
January 25th, 2008, 02:06 PM
If all three properties are under the umbrella of an investment corporation or a similar entity, it is very possible that a bank will offer a $360k line of credit while placing a caveat on all three property titles. I have seen it done multiple times. I'm not sure if the law is different in the US, but I highly doubt it.

Incidentally, it's a good time to buy with the US economy headed toward recession. I imagine in a few more months, owning will be far, far cheaper than renting.

CliveStaples
January 25th, 2008, 04:23 PM
Isn't that...un-"fair"...to take advantage of?

starcreator
January 27th, 2008, 12:21 AM
Are you referring to my suggestion that one buy cheap American real estate, or something else?

CliveStaples
January 27th, 2008, 12:29 AM
It just struck me as odd for a Keynesian to direct others to take advantage of market recessions, since Keynes's whole goal was eliminating the market cycle.

starcreator
January 27th, 2008, 12:34 AM
It just struck me as odd for a Keynesian to direct others to take advantage of market recessions, since Keynes's whole goal was eliminating the market cycle.

Minimizing the extremities of the business cycle, not eliminating them. And past that, I don't remember Keynes or any tenet of Keynesianism calling recessions morally reprehensible or discouraging business activities during recessions. Indeed, it is every interventionist economist's desire to stimulate consumption and spending during recessions (in Keynes' view, via government spending) so that the economy can expand again. Buying up property and conducting business during a recession, when many are unnecessarily saving, would be "doing Keynes' work", so to speak.

Besides, I'm not sure if I would call myself a "Keynesian", at least in the sense that I think both Keynesian and monetarist interventionism have a role in improving market outcomes.

CliveStaples
January 27th, 2008, 12:49 AM
Minimizing the extremities of the business cycle, not eliminating them. And past that, I don't remember Keynes or any tenet of Keynesianism calling recessions morally reprehensible or discouraging business activities during recessions. Indeed, it is every interventionist economist's desire to stimulate consumption and spending during recessions (in Keynes' view, via government spending) so that the economy can expand again. Buying up property and conducting business during a recession, when many are unnecessarily saving, would be "doing Keynes' work", so to speak.

Except that the activity you are advocating implies that a recession "opens doors" to growing wealth. The traditional Keynesian view is that recessions are inherently wasteful, avoidable, and damaging to the economy.


Besides, I'm not sure if I would call myself a "Keynesian", at least in the sense that I think both Keynesian and monetarist interventionism have a role in improving market outcomes.

I'm truly stumped that you'd identify with any part of monetarism.

starcreator
January 28th, 2008, 08:59 PM
Except that the activity you are advocating implies that a recession "opens doors" to growing wealth. The traditional Keynesian view is that recessions are inherently wasteful, avoidable, and damaging to the economy.

I've never seen this as the "traditional Keynesian view". Obviously, a Keynesian wants to minimize declines in production and maximize increases, and therefore attempts to spend an economy out of recession and into expansion.


I'm truly stumped that you'd identify with any part of monetarism.

Are you really that stumped that I identify with parts of a massively interventionist outlook on fiscal policy?

CliveStaples
January 29th, 2008, 02:20 AM
I've never seen this as the "traditional Keynesian view". Obviously, a Keynesian wants to minimize declines in production and maximize increases, and therefore attempts to spend an economy out of recession and into expansion.Everyone wants to minimize declines in production and maximize increases. Keynesians think that saving is harmful to the economy, that people going out of business is inherently bad for the economy (rejecting the principle of "creative destruction", which is the actual reason that recession is part of the business cycle), and that creating false demand will somehow produce real benefits for the economy. I agree with his ideas when the market is in crisis (which has happened exactly once in the U.S., and it was due to the government's activity in the first place); however, I don't think that recessions are a sign that the market isn't working.


Are you really that stumped that I identify with parts of a massively interventionist outlook on fiscal policy?I wonder how much you actually agree with monetarism:


Many monetarists sought to resurrect the pre-Keynesian view that market economies are inherently stable in the absence of major unexpected fluctuations in the money supply. Because of this belief in the stability of free-market economies they asserted that active demand management (e.g. by the means of increasing government spending) is unnecessary and indeed likely to be harmful. The basis of this argument is an equilibrium between "stimulus" fiscal spending and future interest rates. In effect, Friedman's model argues that current fiscal spending creates as much of a drag on the economy by increased interest rates as it creates present consumption: that it has no real effect on total demand, merely that of shifting demand from the investment sector (I) to the consumer sector (C).
Friedman's version is the prevailing model of monetarism today; I do find it quite odd that you'd agree with Friedman and maintain your neo-socialist views (national healthcare, public housing, etc.).

starcreator
January 30th, 2008, 11:20 PM
Everyone wants to minimize declines in production and maximize increases. Keynesians think that saving is harmful to the economy, that people going out of business is inherently bad for the economy (rejecting the principle of "creative destruction", which is the actual reason that recession is part of the business cycle), and that creating false demand will somehow produce real benefits for the economy. I agree with his ideas when the market is in crisis (which has happened exactly once in the U.S., and it was due to the government's activity in the first place); however, I don't think that recessions are a sign that the market isn't working.

You'll need to back this up with something before we can continue. Apart from the fact that I am not a Keynesian, I thought Keynes identified recessions as a necessary correction to problems like excessive saving; a decline in market values incites capital investment as opposed to hoarding of funds.


I wonder how much you actually agree with monetarism:

Many monetarists sought to resurrect the pre-Keynesian view that market economies are inherently stable in the absence of major unexpected fluctuations in the money supply. Because of this belief in the stability of free-market economies they asserted that active demand management (e.g. by the means of increasing government spending) is unnecessary and indeed likely to be harmful. The basis of this argument is an equilibrium between "stimulus" fiscal spending and future interest rates. In effect, Friedman's model argues that current fiscal spending creates as much of a drag on the economy by increased interest rates as it creates present consumption: that it has no real effect on total demand, merely that of shifting demand from the investment sector (I) to the consumer sector (C).
Friedman's version is the prevailing model of monetarism today; I do find it quite odd that you'd agree with Friedman and maintain your neo-socialist views (national healthcare, public housing, etc.).

I said that monetarist intervention has a role in rectifying market outcomes, not that I agreed with monetarism to the exclusion of Keynesianism. I think that enacting monetarist solutions in conjunction with neo-Keynesian ones can help to stabilize the economy, which is generally volatile. In a recession, for instance, we might see government spending and interest rate cuts. In the wake of rampant inflation, we may see the opposite.

CliveStaples
January 31st, 2008, 12:58 AM
You'll need to back this up with something before we can continue. Apart from the fact that I am not a Keynesian, I thought Keynes identified recessions as a necessary correction to problems like excessive saving; a decline in market values incites capital investment as opposed to hoarding of funds.

The goal, as I read, of Keynesian economics was to eliminate market recessions, which evince an inherent instability in the market--as they inevitably produce recessions, which are ipso facto "market failures". I may be wrong, of course; it's been a while since I read Keynes.


I said that monetarist intervention has a role in rectifying market outcomes, not that I agreed with monetarism to the exclusion of Keynesianism. I think that enacting monetarist solutions in conjunction with neo-Keynesian ones can help to stabilize the economy, which is generally volatile. In a recession, for instance, we might see government spending and interest rate cuts. In the wake of rampant inflation, we may see the opposite.

That's an odd brand of monetarism. It mostly falls under the umbrella of Friedman, who thought that markets were generally stable, but required a stable underpinning of currency; the goal of monetarist policy is to provide stability in the currency, not to correct for "volatile" markets.