Non QM Lender/fix and refi to STR

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Non QM Lender/fix and refi to STR

Bryan Field
San Diego, CA · Member since 2018 · 24 posts · 8 votes

Hello,

I'm under contract with a single family home in Gilbert, AZ and the house would make for a great short term rental. The house is being purchased in an LLC using hard money. Looking to spend about 65 - 70k on the rehab and then refinance out and start using it as a STR.

I'm wondering if there are any lenders out there that will approve a cash out refi at 85% LTV?. Most I've talked to will only go so far as to the standard 75% LTV. The difference of cash left in the deal between 85% and 75% is significant to the point that I'll have to just flip the property if I can't find those higher TLV cash outs for an income property.

Any recommendations?

Thank you,

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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
4y
Quote from @Bryan Field:

Hello,

I'm under contract with a single family home in Gilbert, AZ and the house would make for a great short term rental. The house is being purchased in an LLC using hard money. Looking to spend about 65 - 70k on the rehab and then refinance out and start using it as a STR.

I'm wondering if there are any lenders out there that will approve a cash out refi at 85% LTV?. Most I've talked to will only go so far as to the standard 75% LTV. The difference of cash left in the deal between 85% and 75% is significant to the point that I'll have to just flip the property if I can't find those higher TLV cash outs for an income property.

Any recommendations?

Thank you,


The market has tightened up dramatically on leverage recently, theres unfortunately about a 0% chance of finding an 85% cash-out on a STR right now

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  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    4y
    Quote from @Bryan Field:

    Hello,

    I'm under contract with a single family home in Gilbert, AZ and the house would make for a great short term rental. The house is being purchased in an LLC using hard money. Looking to spend about 65 - 70k on the rehab and then refinance out and start using it as a STR.

    I'm wondering if there are any lenders out there that will approve a cash out refi at 85% LTV?. Most I've talked to will only go so far as to the standard 75% LTV. The difference of cash left in the deal between 85% and 75% is significant to the point that I'll have to just flip the property if I can't find those higher TLV cash outs for an income property.

    Any recommendations?

    Thank you,


    The market has tightened up dramatically on leverage recently, theres unfortunately about a 0% chance of finding an 85% cash-out on a STR right now

    [email protected]
    Harpoon Capital514 Reviews
    WebsiteView Page
    3Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    4y
    I don't think the fact that you're planning to short term it instead of long term it matters much at all unless your DTI stinks and you need the projected rent but you could do that if you're short terming anyway with an investment loan.

    You should be able to finance this thing at 85% with a conventional investment product which just about any mortgage broker can do.
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  • Kevin Woodard
    Lender · Nationwide · Member since 2021 · 220 posts · 105 votes
    4y

    @Bryan Field what’s the time line look like for you? You may be able to find 80% leveraging but there is a lot of underwriting you’ll have to get through, which adds to time to close. 

    Hope this helps.

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  • Bryan Field
    OP
    San Diego, CA · Member since 2018 · 24 posts · 8 votes
    4y

    @Luke Carl & @Kevin Woodard - Our closing and rehab should have me out to about early November. That's less than 6 months seasoning. I am looking specifically for a cash out so if I have to hold for an additional month, so be it. An 85% will get us the highest amount of capital back but an 80% may work depending on how close we are to estimating the ARV.

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  • Michael Kinsella
    Lender · Member since 2018 · 617 posts · 275 votes
    4y

    @Bryan Field 80% LTV is top of the market on long-term debt as @Kevin Woodard implied.

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  • Nick BelskyBusiness Member
    Lender · Orlando, FL · Member since 2021 · 1k+ posts · 704 votes
    4y

    @Bryan Field

    85% in this market is either a HML/PML or a unicorn. Being an STR is going to make ratios to get 80LTV even tougher if you aren't going through a true STR lender who used AirDNA for rental income. One of the stronger STR lenders just announced this week capping purchases to 70LTV... The STR lenders I know are capped at 75LTV. You may be able to do a No Ratio loan and get 80LTV still, but even those are becoming more and more scarce. If your ratios run too tight, you may be capped by DSCR ratios too.

    Not enough info here to really give you a possibly analysis, but it sounds sticky either way.

    Cheers!  

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    Belsky Mortgage, LLC521 Reviews
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