Hey BP Folks!,

So I just signed a contract to build a duplex in SW Florida. Purchase price will be $265,000. Instead of getting a short term loan, the builder is financing it themselves (this cost has been built into the price). They have done a few of these in the same area, and they have all appraised between $300k - $305k. So theres a nice chunk of built in equity. I own the lot FREE and CLEAR. I paid $13,500 for it.

I am looking to refinance and get as much cash out as possible once construction is complete. I have spoke to one lender that said they do 85% LTV refi's pretty often. I would just like to talk to as many lenders as possible to get best idea of where I stand.

Please send me any contacts you might know, that do 85-90% LTV refis on investment properties (multi-family).

P.S. I have excellent credit >750 show good income and the property will cash flow GREAT!

Be careful with any cash out refis over 80% LTV. Your interest rate will not only be pretty high but your also toeing the line of over leveraging with that.

80% is the highest cash out refi LTV I've seen from commercial lenders who have non hard money type rates. Everyone is noticing lending standards loosening up but beware of max LTV cash out refis at the height of a market cycle.

Sounds like one awesome project though!  How long is the process until you have the building finished and rented out?

Lenders will want to see the property rented out and will want you to have met their specific seasoning requirements.  When basing the loan off of the appraised value rather than purchase + construction costs they will have seasoning requirements of 6-12 months although we are starting to see some of these get reduced.  

I'm assuming the mortgage guy who does 85% LTV Cash Out Refis pretty often is most likely doing owner occupied properties.

I have been hearing many of the same opinions you just gave. He isn't a commercial lender though as far as I'm aware. He said he just done an investment property (not owner occupied) at 6% or less. The building will be complete in 4-6 months. We just agreed on the terms of the contract. I own the lot, so that might count towards the seasoning period, but both lenders I have spoke with said I will have no problem refi as soon as it is built. The builder has done over 10 of them in the last couple months. My main concern is getting the highest LTV so I can move onto the next property as quickly as possible.

@Jason Luongo Well I love the strategy of buying vacant land and putting a pre fab type of house on there that can be built quick. Best part of course is skipping the construction management side of it and having them build it into your purchase price. Keep us posted on this thread if you get any updates on confirmed cash out refi terms for this type of thing and feel free to reach out whenever. Good luck with that BRRRR!

Originally posted by @Alex Bekeza :

@Jason Luongo Well I love the strategy of buying vacant land and putting a pre fab type of house on there that can be built quick. Best part of course is skipping the construction management side of it and having them build it into your purchase price. Keep us posted on this thread if you get any updates on confirmed cash out refi terms for this type of thing and feel free to reach out whenever. Good luck with that BRRRR!

Will do Alex, thank you for some of the points you brought up. I love this type of investing, because I know exactly how much its going to appraise for. Also, its much easier to rent a brand new home! If anyone else has any experience on these investment refi's, I would love to get some more feedback or referrals to anyone that has done some higher LTV refinances.

Originally posted by @Jason Luongo :

Originally posted by @Alex Bekeza:

@Jason Luongo Well I love the strategy of buying vacant land and putting a pre fab type of house on there that can be built quick. Best part of course is skipping the construction management side of it and having them build it into your purchase price. Keep us posted on this thread if you get any updates on confirmed cash out refi terms for this type of thing and feel free to reach out whenever. Good luck with that BRRRR!

Will do Alex, thank you for some of the points you brought up. I love this type of investing, because I know exactly how much its going to appraise for. Also, its much easier to rent a brand new home! If anyone else has any experience on these investment refi's, I would love to get some more feedback or referrals to anyone that has done some higher LTV refinances.

Jason, I stumbled upon your post sorry its a little late. I am currently doing the same thing in my market in Alabama with a SFH. How did it turn out? What LTV were you able to get? I am having trouble finding anyone willing to go past 75% LTV.

@Clayton Smith

I was able to find a local bank that did an 80% LTV REFI on a 5 year year ARM amortized over 30 years at 5.25% So I will just have to refi again in a few year which I can do with the same bank or go to a conventional Fannie Mae long term loan

Working with the local bank was a breeze compared to conventional lender. Easy communication and quick closing. I’m not sure if they lend in Alabama but I can gove you his contact info.

@Jason Luongo Would you mind PM'ing me your builder contact information and what area you did this in? Im looking at a few places in Fort Myers where I may do something similar. Thanks

@Jason Luongo how did it all turn out? Get it fully rented? what did the numbers look like if you don't mind sharing. This stuff is interesting to me :)

Originally posted by @Otis Sanders :

@Jason Luongo Would you mind PM'ing me your builder contact information and what area you did this in? Im looking at a few places in Fort Myers where I may do something similar. Thanks

 Sent you a connection request

Originally posted by @Jordan Williamson :

@Jason Luongo how did it all turn out? Get it fully rented? what did the numbers look like if you don't mind sharing. This stuff is interesting to me :)

It turned out pretty good. I purchased a double wide lot and split it with the city. So I built the duplex on one half of the lot. All in I ended up paying just a little under retail value/appraisal value. Around $300k. Each side rents for 1500$ so I’m at my 1% rule I like to meet. And it’s new construction so everything is brand new, and easy to rent out because people want to live in a new home. The deal will get sweeter because I still have the additional lot which I can build a second duplex on, or sell for around $30k. To build the second duplex should cost me all in around 275k. And should appraise for 310k 👍🏻

Your not making a bunch of wealth through forced appreciation and equity like you can on a brrrr deal, but this is simple, easy, and turn key basically. I love new construction for rentals. It does require some more capital up front for down payments.

@Jason Luongo yea not sure it’s for me at this point, but I’m glad it turned out well and your happy! Keep up the great work!