Buying fix up with Heloc, options for cash out refi at 80% ARV?

Question

Looking for advice… I am buying and renoing a property to fix and flip with a heloc. I would prefer to convert to long term rental… are there any loan programs that will allow me to refi at 80% of after repair value? I want to be to pay off the heloc with the cash out refi.

Stephanie P. · Answer

80% cash out on DSCR is out there. PM sent

Andrew Postell · Answer

@Jeff Scholen yes, the entire point to that strategy is for you to own the LLC. Completely allowed.

Jeff Copeland · Answer

Some conventional lenders will go to 80% (versus the usual 75%) on an investment property cash out refi. Just find a good mortgage broker like to shop available loan products for you.

However, the higher LTV usually comes with higher rates and points, so you really have to crunch the numbers on how much of that extra 5% gets eaten up by origination costs and interest before you ever see it.

Jeff Scholen · Answer

@Andrew Postell this is a great idea. When I structure the LLC, is it ok for me to be a member?

Andrew Postell · Answer

@Jeff Scholen it's more of an advanced technique, and you have to qualify with Fannie/Freddie but what we have been doing is instead of buying with cash, we create a loan from our selves...or specifically our LLC. I wrote a post on this method that you can read HERE. Let me know what you think.

Mark Munson · Answer

Hi @Jeff Scholen

80% on a cash-out refinance is a bit difficult to source. You may have better luck with a traditional bank, as most hard money DSCR lenders will cap at 75% on a cash-out refinance. Keep in mind that you will most likely need to season it 6-months as well, meaning you will need to have owned it at least 6-months to get the maximum cash-out.

Scott E. · Answer

Look at DSCR financing. The LTV will be limited by the debt-service-coverage-ratio. But if you expect to bring in high rents on this property (relative to the payment), then you should be able to get to that 70-80% LTV range on your loan.

Buying fix up with Heloc, options for cash out refi at 80% ARV?

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