Is 75% of LTV standard for cash out refinancing?

Question

I called a couple lenders today to enquire about a cashout refinance on BRRRRR properties. This is specifically on a property that has been acquired, rehabbed, and rented in the span of 2 months. They are all telling me a max of 75% LTV. Is this just the baseline standard? Can I find lenders that will give me 80% LTV for this type of situation?

Kenneth Garrett · Answer

@Terell Brown

If you do enough BRRRR projects with one bank eventually they will only loan so much in value of loans over a given time.  Similar to 10 residential loans, some banks might cap you at 6 another 8 and so on.  Everyone can max out with a given lender at some point.

Terell Brown · Answer

Yes I'd own the own the property. The purchase and rehab would be completed funded with my own cash.

Good point, it makes sense that COVID has tightened things up.

Regarding using multiple lenders to spread the banks risk, what specific risks are you mitigating for?

The small chance that the lender goes out of business or are mainly trying to create multiple relationships that you can tap into depending on the situation.

Terell Brown · Answer

Good to know. If you happen to know of any portfolio lenders that offer 80% LTV let me know and I'll give them a call. Thanks

Kenneth Garrett · Answer

@Terell Brown

You did not mention if the property is owned in your name.  If so, then a residential investment loan at 75% is about right.  Not sure if you ran into seasoning requirements as well.  I have gotten 80% LTV on a commercial refinance on a BRRRR, but that was pre-COVID.  COVID has definitely tightened things up.  I think 75% is ok. I’ve had some lenders say they can only do 65%-70%.   I generally use multiple lenders to spread out the banks risk.

Jason Wray · Answer

Terrell,

You can go higher than that in LTV with a portfolio loan but the rate and terms will not be traditional.  You can always refinance at 75% LTV and also take out a LOC up to 85% CLTV.