How to cash out and refinance - not finding it easy

[Robert N.]

Hello BP,

I have listened and read many stories on BP of how people buy a property, fix it up, cash out and use the cash to buy the next - like a BRRR. However, I am having trouble which is frustrating. My income tax returns show that I make good money, so I thought this would not be an issue. I started with a local portfolio lender who said they would give me 80% of the appraisal value...I bought a duplex and fixed it up, rented it, and it appraised at $200,000. I had 100% equity in the deal. So, I went looking an found another investment property and put it under contract without having officially received my 80% ($160,000) cash out. I was flabbergasted that this portfolio lender then had me come in DAYS before I was set to close on the newer property and said he would only give me 25% ($50,000) - no reason...even after I pushed him for a reason. I had to sign to get my $50,000 loan so I could close on the new deal but I was not happy. I AM STILL HAVING TROUBLE finding a lender to give me 70-80% of the appraisal value on that first deal...part which would be used to pay off the $50,000 loan, but that should leave me with another $100,000ish which I plan on using on yet another property I just put under contract. So far, I am not having luck with my getting a cash out on my first deal and a loan for the new deal. I am in KY.

I am looking for lenders who will give me a cash out and a new loan for the property currently under contract (business on first floor with 2 apartments above it - all rented). What is the typical % rate and points I can expect to pay on these things. This will be my fourth property since I started investing in July, 2020 - so I am still learning lots! Thanks! (Worse case scenario, I have to sell my original duplex, do a 1031 exchange to get all my money out of it - but that isn't my plan! I want to buy and hold.) Any help is appreciated!!!

[Jaron Walling]

@Robert N. Congrats on the success with investing thus far! You've only been investing since July of last year? What do you expect from the lenders? Most lenders have time constraints and rules to follow. My lender requires at least 6 months to cash-out anything and for my first property it was 12. I'd slow down and consider how good these properties really are, get them stable, and then approach the bank. My market is relatively cheap but these properties must be distressed? You can't touch a decent duplex in my market for $200K that cash-flows. The property under contract sounds like a commercial loan situation, but I could be wrong. That's a whole new ball game from a lending prospective so get prepared for that.