Cash out refinance hard money lender recommendations

- · Member since 2018 · 48 posts · 62 votes

I am in the final stages of a rehab in Indiana that I was planning on refinancing through a hard money lender once it is rented. Before the virus I saw some hard money lenders up to 80% LTV @ 6% for 30 year fixed loans.

Are there any lenders offering similar terms now? Property was 70k and with the rehab I’m in it for just under 90k. It should appraise for 130k. I expect to be able to rent it for $1375.

Expenses are $200 a month for taxes and insurance. So with a mortgage at 6% it's somewhere around a 1.9 DCR.

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Guifre Mora

Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes

Originally posted by @Kevin O'Brien:

Are there any lenders offering similar terms now? Property was 70k and with the rehab I’m in it for just under 90k. It should appraise for 130k. I expect to be able to rent it for $1375.

Expenses are $200 a month for taxes and insurance. So with a mortgage at 6% it's somewhere around a 1.9 DCR.

Kevin, realistically you are looking to 70/75% LTV. I'm starting to see lenders are coming back slowly but LTV's are not pre CV-19.

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Guifre Mora
Lender · San Diego, CA · Member since 2019 · 874 posts · 355 votes
6y
Originally posted by @Kevin O'Brien:
I am in the final stages of a rehab in Indiana that I was planning on refinancing through a hard money lender once it is rented. Before the virus I saw some hard money lenders up to 80% LTV @ 6% for 30 year fixed loans.
Are there any lenders offering similar terms now? Property was 70k and with the rehab I’m in it for just under 90k. It should appraise for 130k. I expect to be able to rent it for $1375.
Expenses are $200 a month for taxes and insurance. So with a mortgage at 6% it's somewhere around a 1.9 DCR.

Kevin, realistically you are looking to 70/75% LTV. I'm starting to see lenders are coming back slowly but LTV's are not pre CV-19.
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Odie Ayaga
Specialist · Delran, NJ · Member since 2016 · 2k+ posts · 951 votes
6y
Most of the ones I work with have stopped their long-term products. I think I know maybe 1 or 2 that still have them, but with more onerous terms
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Alex BekezaBusiness Member
Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
6y
@Kevin O'Brien I would be prepared to settle for a slightly lower LTV depending on when exactly you plan to cash out. When did you purchase the property? Most commercial/asset based lenders who offer cash out refinances with short seasoning requirements (less than 6 mos) have suspended operations and/or slashed LTV/raised rates in light of market volatility. We do expect SOME of these lenders to begin resuming business sometime in June or the beginning of July but it's an optimistic outlook and will likely come with conservative adjustments to guidelines that made sense "Pre Covid-19". They're not tied to all of the same mechanisms as Fannie/Freddie conventional loans and rely on an appetite from a secondary market of buyers in the vast majority of cases. The secondary market (or even portfolio lenders who hold the loans) have to perceive some extra risk in relying solely on DSCR rather than the borrower's personal DTI (the main beauty of commercial/hard money lending to this point).
Hopefully in the short term and not the long term, relying mainly on rental income from an underwriting stand point has to be taken with a grain of salt given the immense waive of unemployment and businesses going belly up.
However, its certainly possible that I'm being pessimistic or am unaware of a specific company so please do let us know here if you end up getting a terms sheet (before the end of summer that is) for 80% Cash Out 30 year fixed 6% because I'd love to know. (presumably this loan would not require DTI, tax returns, or proof of income, and allow LLC vesting, have no limit on # of mortgages, etc.)
All the best,
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Kevin O'Brien
OP
- · Member since 2018 · 48 posts · 62 votes
6y

70/75% is what I’m seeing also. 70% gets all my money out of the deals so it’s good enough. But hopefully thinks shift back to norma in June when Im refinancing.
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Kevin O'Brien
OP
- · Member since 2018 · 48 posts · 62 votes
6y
Originally posted by @Alex Bekeza:
@Kevin O'Brien I would be prepared to settle for a slightly lower LTV depending on when exactly you plan to cash out. When did you purchase the property? Most commercial/asset based lenders who offer cash out refinances with short seasoning requirements (less than 6 mos) have suspended operations and/or slashed LTV/raised rates in light of market volatility. We do expect SOME of these lenders to begin resuming business sometime in June or the beginning of July but it's an optimistic outlook and will likely come with conservative adjustments to guidelines that made sense "Pre Covid-19". They're not tied to all of the same mechanisms as Fannie/Freddie conventional loans and rely on an appetite from a secondary market of buyers in the vast majority of cases. The secondary market (or even portfolio lenders who hold the loans) have to perceive some extra risk in relying solely on DSCR rather than the borrower's personal DTI (the main beauty of commercial/hard money lending to this point).
Hopefully in the short term and not the long term, relying mainly on rental income from an underwriting stand point has to be taken with a grain of salt given the immense waive of unemployment and businesses going belly up.
However, its certainly possible that I'm being pessimistic or am unaware of a specific company so please do let us know here if you end up getting a terms sheet (before the end of summer that is) for 80% Cash Out 30 year fixed 6% because I'd love to know. (presumably this loan would not require DTI, tax returns, or proof of income, and allow LLC vesting, have no limit on # of mortgages, etc.)
All the best,
The property was purchased on March 27th. I can do 3 months of seasoning but if I had to wait 6 months I’d probably just sell it. If 70% is the max I’m going to get I’ll still take it because that covers all the money I invested. The extra 10% is just gravy. Hopefully we see things return to before. I missed the early 2000’s NINJA loans and this is the closest I’ve seen to it. 🙄

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Account Closed
Rental Property Investor · Usa · Member since 2020 · 74 posts · 80 votes
6y
@Kevin O'Brien any luck finding a company to refinance?
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Tom S.
Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
6y
@Kevin O'Brien Yes, also curious if you were able to refinance, or did you just up selling the place?
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