Commercial (12 Unit) Cash Out Refinance Help

4 Replies

I've been digging on this for a little while, and can't find anything concrete on where to start. 

I have a 12 unit that I bought in a medium state of distress in 2013 that I've since turned around. The place is running very well now, and I've done tens of thousands of dollars worth of capital improvements to improve the outside, the parking lot, the individual units, and the heating infrastructure. 

I paid $420K, and I've had investors come along and offer $625K for it; despite the fact that it isn't even on the market. If I math put it into my valuation spreadsheet, at a cost $792,500 with current incomes: the cap rate is at an 8, and it cash flows $800 per month if a person were to put 20% down and get a 4.5% rate at a 20 year amortization. So there's definitely definitely some room to work with here, considering I owe around $290K.

My question then, is: How do I go about doing a cash out refinance on this?

Should I take it to my local bank that currently has it financed, and see what they'll do for me? 

Should I shop it around to other local banks? 

Is this something I need to seek a mortgage broker on? 

How and where would you start trying to get this done?

Any and all advice is appreciated. 

shop around. I did the same with a cashout refinance. start with one appraisal from one bank and if the numbers are in line with what you think its worth, piggy back off that and see which bank gives you the product at the LTV you want.

@Johnny Hastings  

'Yes' is my answer to most of your questions.  

You should shop around a variety of lenders: local banks, regional banks, national banks, credit unions, Agency lenders (i.e. Freddie Mac SBL), as well as contact at least one mortgage broker to do the same.  You'll get more comfortable speaking the language after the first few quotes, and should be able to negotiate the best terms for yourself.  Brokers only charge a fee if you close with their lenders, so don't be afraid to put them to work.

You should be prepared to share all of your personal financials, and at least 2 years of financial history and proforma of the property, including a current rent roll.

BP is a great spot to find lenders and brokers, I suggest you start here!

Thanks to both of you for that! I'll start by searching BP then, as I'm here already. Hopefully I can make a few contacts here, and then talk to the locals I've worked with before. 

Seems like there is some equity- how much are you wanting to pull? 

Cash out on commercial can be a bit more complicated but I have a few conventional and non conventional long term cash out options that may work for you if the numbers work. Feel free to contact me and I'll take a look!

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