What companies to use for maximum refinance LTV?

[Patrick Philip]

After I rehab my projects, I want to get as much money as possible out when I refinance. Does anyone know specific companies that offer high LTV's? Should I go through regular banks? I'm looking for 90%.

[Andrew Postell]

@Patrick Philip this post is a very common subject and it's totally normal to have this many questions about it.  There are some important concepts to understand when it comes to leveraging your money when purchasing investment properties.  

The first thing I would recommend understanding is that your measure standard for downpayments should be 15%.  You can buy an investment property, that doesn't need rehab, for 15% down with a conventional loan (this is for a Single Family Residence).  Now, you do get better rates at 20%, 25%, etc.  But just keep 15% down in your mind for now.

Second is that you can actually get a conventional rehab loan too.  15% down of the After Repair Value.  The thing to this loan is that it takes 30 days to close.

So what's the benefit to a Hard Money Loan? They can certainly close in less than 30 days. And sometimes we absolutely need to close quickly. But the other benefit is that, in theory, they can get you in a home for 0% down. Most hard money lenders will lend 70% of the ARV. So if you buy a home at 50% ARV, the home needs 20% of the ARV to be complete, what's your out of pocket? Just the lender fees essentially. Which is WAY lower than 15% down.

So let's take an example that comes up frequently: What if you bought a home for $50k, it needs $30k in renovations, and it's worth $100k ARV. With lender fees your total outlay will be $90k or so. Is that property worth buying? Remember that 15% down rule above? If you were to buy a comparable property but complete your down payment would be $15k. Using a HML and then refinancing your total outlay is also $15k...but you have more at risk on the home with renovations. So with that home we either need to reduce our offer or see if there is a way to reduce the renovations. Otherwise, just buy the completed home and save the headaches! I hope this makes sense. If you think this is helpful to others then feel free to vote on it and ask any further questions. Thanks!