DSCR Refinance Options on a BRRRR

[Account Closed]

I was hoping the Bigger Pockets community could lend me some refinance advice on a BRRRR. I am investing out of SW Florida (live in Sarasota, Florida) fulltime. I BRRRR our properties utilizing a DSCR commercial product for the refi. With higher interest rates, I have gone to interest only 5:1 DSCR loans to maximize the cash I can take out. I am beginning to leave quite a bit of equity in these deals as the lender requires a 1:1 loan ratio. On my latest refinance, I am looking at only getting about 55-60% LTV. On this latest deal, $375k all in w/ appraisal of $520k; but could only get a $305k refinance based on the rental income of the property. My questions, how do I leverage the equity left in the BRRRR deals? Or is there another commercial loan product or refinance strategy I should consider? (FYI, it needs to be a commercial loan product as IMO SW FL liability is simply too litigious to risk taking the refi out in a partner's personal name).

[Rosie Small]

Quote from @Account Closed:

Great information.  I appreciate getting several good options to consider.    

A couple of follow-up questions/thoughts:

Is the 40% equity left in a deal doing anything for me other than looking good on a balance sheet?   

I like the idea of a business line of credit as using the equity if/when needed.    Interesting if that going to impact my income-to-debt ratio when I cash-out refinance the next one. Is a business line of credit available if the rental income isn't there?    

Once again, thanks for the ideas and this gives me some good starting points to research.   

 Hi Eric

I have all my rentals in Bradenton, next to you. House's prices still high, In a decent neighborhood ARV will be above $400,000, its hard to find the property that property that qualified to the 1.1 % ratio, with the high interest rate and cash flow, without leaving all the cash in, which defeat the BRRRRR.

I just finished out a cashout refi , Bought the house for $270,000 with hard money at 10% in August 2022, b- c neighborhood, Before to bought it , I made sure that it can be rent out for $ 3000 a month. I rehab it with $ 50,000, rent it out in November and started the process to Cashout in November as well, The appraisal came to $ 385,000 , $ 10,000 to $ 15,000 below expected ,but with this market I just went along. My new mortgage is $ 2,400 included ins and tax, 7.99% 7y arm, after all set and done , I cashout $ 21,000 , to be really honest really disappointed, however the house is cash flowing, It is in a desirable neighborhood, close to everything. And It has a 850 sqft detach garage , ready to be convert in a ADU, which it can be rent out for $ 1,000.

How I see business now is : rent is the key, if it doesn't rent right , don't buy it, It will be hard to refinance.By the way banks want to see annual rents, no short time leases or VRBO.