Multifamily investors: how much do you refinance?

[Rich C.]

For multifamily investors, I'm curious as to how much of the property value you prefer to refinance?  For example, do you refinance just enough to take the cash out of a deal?  Or, do you always take the maximum allowed by the bank?  Or, do you find it is situation dependent (i.e. where rates are or if more steady income is desired?

[Todd Fox]

Totally depends on your personal needs and risk tolerance. A very smart person once said "Cash is King, but leverage is God"! Im growing my business so I try to pull as much cash out of each property as possible. With multi-family buildings, most institutions will loan on cash-flow. If you're buying value-add properties, fixing them up and increasing rents. Then a bank will typically loan on an appraised value that is based on the free cash flow. My area they use a Cap rate of 7 to 8 and need a DSCR of 1.25 or higher.