Cash-out refinance limit on loan size?

[Matthew Boyer]

We're looking to purchase a second short-term rental property (beach vacation area), but this time around we're considering going bigger and intending to add significantly to the property. The purchase price is around $1.2M with 25% down (as an investment property) and we'd be putting in around $300K in reno/remodeling. Realtor evaluation puts the ARV around $1.8M.

So the plan is to use loans to cover the remodeling costs then doing a cash-out refinance after the work is done (6-12 months later since we couldn't start work until after summer rental season), *but* our current lender (loan originator) says the max loan for either purchase or refi of an investment property would be $1M. That would limit our cashout at refi to under $200K. 

The lender's investor is Chase, who he says is enforcing that $1M limit and as a big player their limit is likely a standard. So my question is if that's true and we're going to be against a hard limit if we want to refi and get cashout with any attempts at getting the loan above $1M.

Does anyone have experience/knowledge of loans/refi's over the $1M mark? Or is this really a standard limitation? Seems hard to believe there aren't loans out there greater than $1M when we see monster homes in the area over $3M-$4M, but I want to know our limits before going down any roads.

Thanks.