Cash Out Refi Portfolio Lenders Offering 30 year Fixed

[Travis Cogburn]

Looking for options/advice for reputable companies that offer cash out refi offering 30 year fixed terms for a portion of my portfolio. Currently have a portion of properties that are all new construction in 2022/2023 that I am looking to cash out on and refinance in to a 30 year fixed as a portfolio loan as opposed to as individual refis. Have a hefty amount of equity in these 6 properties  (over 50%) and would value the properties between $2-2.25M. 

I have yet to ever do a cash out refi on a portfolio and these have the highest interest rate to where it would actually make the most sense, even at the current rates (would probably end up with a lower refi rate to be honest). Any and all advice or recommendations on reputable companies that you can offer would be appreciated. I have reached out to a few I have found, but call me old fashioned for not wanting to just trust a company from google :)

Cheers!

[Stacy Raskin]

@Travis Cogburn, if you're looking to cash out individual properties, DSCR can be the way to go.

DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth as it doesn't consider borrower income or borrower debt to income (DTI) ratios.

Here's a bit more in detail about how rates are calculated for DSCR loans:

1. Credit score- the higher the best. 760+ generally gets best pricing for investment property loans with most lenders

2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

3. Are you cash flowing the property? Is your DSCR ratio greater than 1-meaning are you cash flowing. Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit.

4. Length of prepayment penalty- Generally prepayment penalties run from 1-5 years. The longer the prepayment penalty term the less of an impact on the rate.

I've included an example below to help illustrate this.

So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

See example below:

DSCR < 1

Principal + Interest = $1,700

Taxes = $350 Insurance = $100 Association Dues = $50

Total PITIA = $2200

Rent = $2000
DSCR = Rent/PITIA = 2000/2200 = 0.91

Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

DSCR >1

Principal + Interest = $1,500

Taxes = $250, Insurance = $100 Association Dues = $25

Total PITIA = $1875Rent = $2300DSCR = Rent/PITIA = 2300/1875 = 1.23

Generally lenders will let you vest the title in your name or an LLC name.