75% LTV? What about owner occupied?

Question

Just finished BRRRR by @David Greene !!! Fantastic book and really changed the way I will think about scaling my portfolio.

75% LTV refinance was mentioned a lot and I am wondering if this is because a 25% downpayment would have to be left as equity in the property for an investor loan. What if I wanted to rehab the property and then move in as a owner occupier? Could I leave 5% for a conventional loan and then pull out 95% on the Refi because its my primary residence?

Andrew Postell · Answer

@Darren Bloomfield yes, they suggest 25% because that's what most lenders would require.  But as mentioned above, some lenders might lend differently.  Always encourage you to get prequalified ahead of time.  That way, you know what your options are when you refinance.

Oh, and one thing to consider....the whole reason why we do the BRRRR method is to AVOID the 25% down (or so) that investment properties require with their loans.  If you are buying your own primary home your minimum is 5%...and often times even less than that.  So if you want to just target your own primary home, to househack lets say, then just do 3%-5% down and call it a day.  No reason to risk all of that other money hoping it will turn out.  Some of us have no choice but to focus on investment properties though.  Meaning, if I have a family, job, etc. that doesn't allow me to move - my only choice is the BRRRR method to keep my out of pocket expenses low.

I hope this makes sense how I am describing it.

Mike Singer · Answer

Most cashout loans are capped at 80%, even as owner occupied. They allow you to go higher when doing a rate/term or a purchase but not a cashout transaction.

Carlos Ptriawan · Answer

the 25% is actually a buffer, let's say tomorrow there's a financial crisis, and the bank can sustain their losses with 75% LTV.If you only put 5% down, it gives an advantage to you and very bad business to the lender, just think about it.

Eliott Elias · Answer

Max i've seen on a investment is %80. You want to be all in on your property at %70 not %75. There are a ton of closing costs associated with refinancing.

75% LTV? What about owner occupied?

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