Cash out Refi Commercial vs DSCR

[Raj Patel]

Hi everyone. 

I own a retail building with a partner under an LLC.

We have around $300k in principal left, and I was thinking about a cash out refinance. 

Even at a conservative 8% cap rate the building is worth around $1.625M. I was hoping for a new loan of around $1.1M thus cashing out with $800k. 

One concern is we found a new tenant in 2023 and gave him a 4 month break on the rent because he invested massive amounts into the renovation. We also had an eviction and lost around $15k in rental income in 2023. But in 2023 we had a $40k deposit in back rent from 2022. The CPA is still doing the tax return. 

But 2024 is looking to be around $168k in gross rental income without any disruptions and $30k in property tax. 

The building is fully occupied as of April 2024. Every year has only shown a rise in gross rental income. No down word trend ever. 

What would be the best way to move forward? 

My goals would obviously be to get the best possible interest rate, and a 30 year term. 

What would lenders look for in both scenarios, and what would the pros and cons of each path moving forward? 

Hope to use proceeds T ($700k +$100k emergency fund) to purchase $2.8M (25% down)worth of RE mixed use in Northern NJ/NYC.

thanks