Property Manager · Milwaukee, WI · Member since 2016 · 15 posts · 14 votes
7y
On a cash-out refinance, usually you'll get 75 LTV for investment properties, but you may be able to discuss this with the bank. Waterstone bank or Waukesha State Bank is a couple I've used for refinances.
Rental Property Investor · West Bend, WI · Member since 2015 · 931 posts · 598 votes
7y
not to many NOO 80% out there, BUT you need to consider if it is smart to do 80% on a 5-7 year ARM, especially with a 30 year amortization, Keep in mind your principal pay down in 5-7 years is very minimal, and you will need to refinance. So your value will need to be the same or greater at that time. Consider a change in the economy, what position would you be in if your value came down say 10-15% requiring additional funds to close the new loan? Example: value today $100K loan 80K at 5% for 30 years amm starting today. in 5 years your balance would be $73,600 so if values dropped 10% you would need to bring in $1,600 plus loan costs just to renew your loan to 80% LTV 15% market value loss you would need to bring in $5,600 plus loan costs just to get to 80% LTV, Not saying this is going to happen, BUT I have seen this happen before and investors lose everything because they grew a portfolio this way, and a small market change wiped out their equity position, and no one would refi them. Personally I never borrow over 60% LTV on any one property unless its fixed for the full term of the loan, and never more than 40% LTV across my portfolio, and no more than 15 year Amortization, this provides significant insulation from market changes.
I practiced as an REO Listing broker since 2006, I have seen this play out many times, I know many investors that lost entire portfolios, even after tapping retirement funds to try and keep it afloat, losing that money as well. really consider your position, especially consider what can happen in 30 years, Personally Im not confident the Real Estate Market will be the same 5 years from now as it is today, I hope Im wrong, but I would never bet my financial future on the market always appreciating.