Cash-Out question
Im doing pretty good. Bought some buildings, leased them out, good tenants, not quite credit but multiple tenant locations, north east. Good real estate.

 I bought the buildings full recourse 80 ltv, made cash flow. Cap rates support full cash out. Im making a 20% CoC but im tapped out and want to do it again (and again)

Mortgage brokers say: need skin in the game. 

My mentors: cashed out of many properties when they were income producing "why would you sell??!"

Prospective buyers would all get the same amount of money if they were doing a new acquisition.

  


So what am I missing? Why am I finding it hard to cash out of a property if the property is operating and covering debt service with long term leases. Why would a bank at that point want skin in the game? How did my mentors do it? Am I just looking at the wrong banks? Isn't my recourse enough? Some of these properties support non-recourse cash outs but the mortgage brokers are on the fence. What don't I know?
[{"id": "f6wqt1u", "text": "Can you be more specific regarding:\n\nMortgage brokers say: need skin in the game. \n\nWhat exactly are they asking for you to put up? Lenders should be able to tell you what they're looking for. Maybe your liquidity isn't there?", "replies": [{"id": "f6wryxl", "text": "Sure.\n\nIt's not a liquidity issue, I'll give you an example\n\nPicked up a bldg for 1m50, 1.1MM w/ closing costs. Vacant.\n\nProduced NOI of 145k. Take away vacancy. maintenance, Management, etc. 110k.\n\nLiquidity isn't the issue. Nor is PFS.\n\nSend this to my brokers and the say \"well that's all your money out. Need skin in the game\" - why? Back when I was straight leasing brokerage I had guys secure cashouts on leases I signed more times than I can count. What's different?", "replies": [], "depth": 2}], "depth": 1}, {"id": "f6wtmw1", "text": "Skin in the game is everything.  It shows you\u2019re invested on a real level...not just squeezing out every drop of equity every year.  Get in a healthy position with the ability to put cash down on your deals and you should be fine.", "replies": [], "depth": 1}, {"id": "f6wty0k", "text": "Large Banks will usually only go up to about 65% cash-out refi, with 1.25x DSCR. Hopefully you understand DSC and how any lender looks at the true NOI of a property. \n\nSmaller regional, community banks may lend up to 75% LTV with good cash flow and strong personal net worth (personal discretionary\n cashflow). Meaning that if the shit hits the fan and you lose tenants (I.e. down to 30% occupancy) you can service the debt personally while rebuilding the rent roll. \n\nA lot of lenders will stress test each lian at various DSC ratios and NOI/vacancy variables to ensure max cash out...meaning they all have different criteria for cash-out refinance. Also, tell your brokers to look at term as well...are you looking for mini-perm or perm debt.", "replies": [{"id": "f6wvyws", "text": "Yep. So a small bank giving a 75ltv would be a full cash out. 100% looking for perm, long term. Go to sleep. Projects are done. Hence the complaint. No skin in game.\n\nIt should be an achievable and replicable. Am I with the wrong lenders?", "replies": [], "depth": 2}], "depth": 1}, {"id": "f6x0g8x", "text": "I would recommend getting a similar 80% LTV loan. Based on what you have said your properties are worth more now so you should be able to pay off your current loan and get proceeds regardless. You should then use those proceeds and 1031 into another project using those proceeds as part of or all of your equity. That way you defer your taxes and can purchase another property without using or raising much more capital.", "replies": [{"id": "f6xb5p3", "text": "Why do you 1031 if you don't sell?", "replies": [{"id": "f6xbh8l", "text": "Sorry, I mixed up what I was trying to say. You should either sell and 1031 into another project Or use your refi proceeds into another project. There are lenders out there who could potentially go 100% take out but they will have a higher interest rate.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "f6xthw6", "text": "Look into a CMBS loan.  More likely to accomplish a cash out refi", "replies": [{"id": "f6xv30c", "text": "Yes. I didn't think of it but cmbs is likely a route. Am I going to have a hard time getting into a tranch if my deal size is of these sizes? Are they non-confirming if tenants aren't credit?", "replies": [], "depth": 2}], "depth": 1}, {"id": "f6xwwjp", "text": "Not sure. I worked at a company that had zero credit tenants and made it work.  I\u2019d speak to a mortgage broker/intermediary and find out how to market it.  Sorry Im not more help but I know it could be an option.\n\nAlso, don\u2019t worry about the tranche it ends up in.  Let the CMBS worry about that.  Worry about the interest rate and terms.  Interest is so cheap right now I\u2019d lock for as long as possible with the right terms.", "replies": [{"id": "f6xxj5b", "text": "Yeah I'm 100%. Going to shop it Monday. Tyvm.", "replies": [], "depth": 2}], "depth": 1}]