Cash out refinance available on a rental property?

6 Replies

I have a rental property that I would like to refinance and cash out for a downpayment on a second property. I have been told by a lender that a cash out refinance is not allowed on what is now considered an investment property (this is a huge blow, as this was my primary residence until 4 months ago). I live in Virginia and am wondering if this is just a rule in certain states? The property has enough equity to refinance as a primary home. I owe $103k on a $113k loan, with an estimated resale value of $170k. Any suggestions on how to leverage this property to continue my investing?

@Linsey Conlon you most certainly can do a cash out refinance loan on an investment. All day long, provided you have the credit scores, can income qualify, and have the equity which sounds like you do on the info you kindly shared. Let me know if I can assist with anything.

Cheers.

@Linsey Conlon You can do cash out refinances on investment properties.  We have done this multiple times and we have clients in Connecticut who do it all the time as well.  It is not a state specific thing, it is a lender thing.  Call some other lenders and I am sure they will be open minded, it just sounds like your current does not want to deal with it for whatever reason.

Originally posted by @Linsey Conlon :

I have a rental property that I would like to refinance and cash out for a downpayment on a second property. I have been told by a lender that a cash out refinance is not allowed on what is now considered an investment property (this is a huge blow, as this was my primary residence until 4 months ago). I live in Virginia and am wondering if this is just a rule in certain states? The property has enough equity to refinance as a primary home. I owe $103k on a $113k loan, with an estimated resale value of $170k. Any suggestions on how to leverage this property to continue my investing?

HI Linsey, 

If you're going through conventional means then 75% cash out on a non owner occupied/investment property would allow you to get back $ 127,500 of your 170,000 valuation.

There are also local banks and credit unions that will most likely entertain 70-80% LTV lines of credit as well, i'd recommend to search locally for these.

The national credit unions like navy federal will go to 70% interest only LTV on investment properties.

Often times local community banks can offer portfolio lines of credit up to 75-80% LTV as well. These guys typically have 1 point charge to originate these but they tend to be commercial notes which can be better in some ways because they typically charge simple interest and the rate is fixed for 5-7 years as opposed to a floater like typical residential HELOC's.

Hope that helps.

This does help a lot! I am so glad to know that there are options that I can consider with financing through other loan programs and that this is not a dead end!

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