How do you pull your money out of a good deal after purchase?

[Gerardo E. Saldana]

Hello BP community!

I need some advice/feedback on how to pull my money out of a good deal after I purchase it. Whether I purchase it cash or with conventional financing, the banks only want to lend/refinance up to a specific LTV (usually 70-75%) on the purchase price EVEN if I buy the property at a significant discount (e.g. 50% of its current market value).

In the past I've always struggled with this same issue, and thus eventually I end up tying all my capital in properties and I'm unable to purchase more (even hard money lenders want you to put some skin in the game). So how do you pull your cash out of a property that you wish you hold but which you bought at a significant discount?

Here is the exact scenario I'm facing right now on some vacant land I'm buying.

Purchase price                                                                                                         $65,000

Additional cost (closing fees, easement, county fees, pizza party, etc).         $15,000     

Total cost                                                                                                                  $80,000

Based on comps land should be worth                                                             $170,000*

*The land I'm purchasing is 3 acres. Just four months ago the next door neighbor sold his 1 acre lot for $85,000 cash. Other comps in the area suggest that the price per acre is around $100,000-120,000.

That would mean that my land when compared to the cheapest and latest comp (the neighbor's lot) would be $255,000 ($85,000 * 3). To avoid any discussions on "best use" and diminishing value on the size of the land, etc, let's just go ahead and say its worth twice as much as the 1 acre, thus $ 170,000.  

I spent a few hours today talking to a few different banks and lenders (conventional) and the most they will refinance me after I purchase the land (it has to be a cash purchase) is 50% LTV but really it is 50% of the purchase price, not of the value. When I talked to them about a construction loan they are willing to take the purchase price of the land (not the value) along with construction costs (per licensed contractor) and lend me 70-75% of the total cost of land + construction.

I am facing the same scenario on an apartment building I've been looking at. It doesn't matter that I can get it at a discount, the bank will still only lend me 70-75% of the purchase price.

I know... I'm complaining about a first world problem here, and I am grateful and feel blessed for the opportunities I have found. However, I'm sure many of you have faced this problem before and have already figured out how to overcome it so that your cash reserves are not the limiting factor on the amount of buy and hold deals you make.

Any feedback/ideas/suggestions?

Thank you in advance!