Best Loan for a Cash Out Refinance on a Duplex in an LLC

Upstate New York, New York
General Real Estate Investing
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Best Loan for a Cash Out Refinance on a Duplex in an LLC

Luke TetreaultPro Member
Investor · NY · Member since 2022 · 49 posts · 21 votes

Hey Guys, I'm sure this is a widely talked about subject but I'm curious what types of loans you guys are using when refinancing out of a property that's in an LLC. Ive used HELOCS in the past before I started purchasing in my LLC but have run into feeling like my local credit unions are very conservative when it comes to "Commercial Loans".

This is a duplex grossing 2000 a month, expenses before a mortgage would roughly 450 for tax, cap ex, insurance etc.. I'm all in at 90,000 between purchase and rehab. 145k appraisal. Which I assumed I would be able to pull out around 98,000 after a refi, including closing costs with a 75% LTV. But my local credit union Commercial Loans are coming out to be well below that 80-84k with 65-70% LTVS and what seems to me very high closing costs due to it being a commercial loan. Just curious if there are better options out there or if this is just my new reality now operating within an LLC. Thanks!

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Vadim F.
Investor · Member since 2020 · 337 posts · 213 votes
2y
Quote from @Nate Herndon:

@Vadim F.

Origination at 2 points or $2500 (greater of) + ~$1800-$2700 underwriting/admin/legal fees (depending on the program)

That’s at 8.75% or 8.75% plus 2pts
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  • Nate HerndonPro Member
    Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
    2y

    Hi @Luke Tetreault, the DSCR looks great to me. A 75% loan would be too easy on 30-year fixed, DSCR program (closing in an entity). A private national lender will not cap you at 65-70% LTV so long as you have a 680+ FICO.

    [email protected]417-605-2196
    1Reply
  • Vadim F.
    Investor · Member since 2020 · 337 posts · 213 votes
    2y
    Quote from @Nate Herndon:

    Hi @Luke Tetreault, the DSCR looks great to me. A 75% loan would be too easy on 30-year fixed, DSCR program (closing in an entity). A private national lender will not cap you at 65-70% LTV so long as you have a 680+ FICO.

     @Nate Herndon what do the closing costs look like for a cash out refi like that?

    1Reply
  • Nate HerndonPro Member
    Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
    2y

    @Vadim F.

    Origination at 2 points or $2500 (greater of) + ~$1800-$2700 underwriting/admin/legal fees (depending on the program)

    [email protected]417-605-2196
    0Reply
  • Debbie FalesBusiness Member
    Lender · Annapolis, MD · Member since 2018 · 145 posts · 47 votes
    2y

    A DSCR loan with a private lender seems like the way to go for you. As long as you have one or more successful exits in the past three years and credit above 620, we are lending up to 75% of ARV for a cashout refi.

    Good luck! 

    [email protected]888-444-3160
    Navigator Private Capital4.620 Reviews
    WebsiteView Page
    1Reply
  • Vadim F.
    Investor · Member since 2020 · 337 posts · 213 votes
    2y
    Quote from @Nate Herndon:

    @Vadim F.

    Origination at 2 points or $2500 (greater of) + ~$1800-$2700 underwriting/admin/legal fees (depending on the program)

    That’s at 8.75% or 8.75% plus 2pts
    2Reply
  • Nate HerndonPro Member
    Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
    2y

    Origination is separate from the rate - so it would be an 8.75% rate on a 30-year fixed term, with 2 points of origination paid as part of the closing costs.

    [email protected]417-605-2196
    0Reply
  • Dallas Sauer
    Lender · Phoenix Arizona · Member since 2018 · 89 posts · 51 votes
    2y

    With decent credit on DSCR you can be in the high 7s low 8s today

    1Reply
  • Nate HerndonPro Member
    Lender · Springfield, MO · Member since 2023 · 277 posts · 195 votes
    2y

    Mmm maybe @Dallas Sauer - in addition to credit it depends on the number of units, LTV, DSCR, seasoning, prepay, etc.

    Here are two scenarios with the same lender and 1.25% separating the rates:

    o 800 FICO, single family, 1.20+ DSCR, 5% for 5 year prepay, rate/term refinance @ 70% LTV
    7.75% on a 30-year fixed

    o 800 FICO, 2-4 unit, 1.20+ DSCR, 54321 for 5 year prepay, cash-out refinance @ 75% LTV
    9.00% on a 30-year fixed

    [email protected]417-605-2196
    1Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 667 votes
    2y

    Yes, DSCR is 100% the way to go!

    [email protected]860-538-3672
    ProAlpha Capital56 Reviews
    WebsiteView Page
    1Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2w

    Hey Luke,

    There are lenders that can do up to 80% LTV cash out on a duplex with a DSCR loan. You may want to check your options before committing.

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    0Reply
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