Cash Out Refi Portfolio Lenders Offering 30 year Fixed
Travis CogburnPro Member
Member since 2022 · 4 posts · 1 voteCash Out Refi Portfolio Lenders Offering 30 year Fixed
Most Popular Reply
Stacy RaskinBusiness Member
Lender · Member since 2022 · 1k+ posts · 526 votes@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.
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7 Replies
- Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes3y
@Travis Cogburn congrats on the amount of equity and for your refinances, its best to explore all options. Portfolio loans aren't pricing out as competitive as individual loans in this current market but new products are coming live all the time. Its best to talk to a broker and see what loan products fit with your needs. Regarding a recommendation as to a lender, I am biased as I am a broker, so I would suggest looking at the find a lender tab in BP and research the lender.
Happy to answer any questions and advise as best I can.
- Member since 2022 · 4 posts · 1 vote3y
Thank you for the insight @Jonathan Taylor!
- 3yMatthew DaviesBusiness MemberLender · Tampa, FL · Member since 2023 · 22 posts · 6 votesHi Travis, thanks for sharing context. Happy to offer additional information on the topic. As you continue your search, you're likely to find several DSCR lenders that can assist you. Echoing comments from prior posts - in the current market portfolios are pricing higher than individual loans. Having said that, lower LTV portfolios are coming in the 7s, depending on DSCR and credit. There are a couple of other items to be aware of when contemplating portfolio loans - some lenders have minimum property values (generally around $100,000) whereas, some can go as low as $50,000 per property if you bundle multiple together. Generally, there are also release clauses if you want to sell or refinance a property within the portfolio. The release price is equal to 120% of the allocated loan amount for each property - essentially meaning that you will be paying an additional 20% towards the principal loan. Hope this helps - good luck!
Quote from @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!
- Member since 2022 · 4 posts · 1 vote3y
Thank you for the insight and more to consider. So far sounds like rates may be better going the individual route, which it all really comes down to the best terms regardless. I will mention that I no longer qualify for conventional loans and rates I am currently seeing in Oklahoma so far are higher than I would like to see, so definitely trying to branch out a bit and see what other companies are offering out there.
- Member since 2023 · 303 posts · 324 votes3y
Hey Travis- Bigger Pockets has a list of preferred DSCR lenders. This would be a good place to start with regards to choosing a specific lender.
- Member since 2022 · 4 posts · 1 vote3yYes ma’am, I have been reaching out to those for individual property cash out refi options. When I originally started I was looking for Portfolio refi that could offer 30 year w cash out options and was not seeing what I was needing in regards to that in the BP lender section.
Quote from @Abbey Humphreys:
Hey Travis- Bigger Pockets has a list of preferred DSCR lenders. This would be a good place to start with regards to choosing a specific lender.
- 3yStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 526 votes
@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 = 0.91Since 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.
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