70% LTV for Refi instead of 80%

[Darin L.]

Hello BP! I have been reading and listening to BP since the really early days and learned a tremendous amount. Thank you! Now I have a specific question: My rehab project on 3-unit property was completed in December and rented almost exactly planned. I went from 12% equity based on 10% down on original loan of $120,000 in late 2016 to having about 35% equity, $180,000 value against original loan of $120,000. The plan was to be able to refi / cash out at 80% LTV. However, all the regular Fannie lenders want 70% LTV now which doesn't allow me to sensibly refi/cash out with only 35% equity. Am I now in the realm of hard money and need to accept that any cash out refi will be at around 7% or is there any other way to do the cash out refi with 80% LTV and get the lower interest rates? Note: I am nearly 100% passive investor with a property manager who is doing the rehab work, and dont intend to do a horseback although I looked at that to use a VA loan but in the end determined it wasn't feasible for our situation. thanks for any insights on how to get around this 70% LTV requirement on. 3-unit property.

[Brian Schmelzlen]

Most of the conventional lenders will want to sell their loans to Fannie which means they need the loans to fit into a box. However, if you are willing to put in the work there are ways around it. There is the hard money route as you mentioned, but I doubt that makes too much sense for your situation. The other route that I can think of is trying to establish a relationship with a number of small community banks to see if there is one that would be willing to give you a portfolio loan at 80% LTV.