Can you cash out refinance or get a HELOC out of commercial property that is 5 units &amp; up?
Hi everyone,
As you read from the title I was wondering if it’s possible to cash out refinance or do a HELOC from an apartment building? If so, what are the requirements for each method? I already purchased a triplex last year using FHA however I switched over from W2 income to 1099 independent contractor since the beginning of this year. Since I switch job fields, I’m trying to inquire more properties this year. I know I would have to take the commercial loan route with a bigger down payment around 20-30% and 6 months reserves. My plan is to BRRRR these properties like I’m already doing with my first one.
Thank You in advance
[{"id": "i0oahd5", "text": "HELOC, no. But a secured line of credit, maybe. Talk to your bank. Refi? Absolutely, typically need 1-year seasoning.", "replies": [{"id": "i0ob32y", "text": "Thank You and will I need 1 year of reserves rather than 6 months or 1 year of owning that property to refinance or getting a line of credit?", "replies": [{"id": "i0ojaio", "text": "You need to talk to a bank.", "replies": [], "depth": 3}, {"id": "i0ss4do", "text": "Typically, 6 months of reserves and 1 year to refi using a new appraisal. Not sure about the LOC.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "i0phax7", "text": "Yes I am a CRE direct lender. I can get you a refi cash out loan that is 40 year fixed, first 10 years interest only. No tax returns needed.", "replies": [{"id": "i0pmz4n", "text": "This dude screams scam\u2026", "replies": [], "depth": 2}], "depth": 1}, {"id": "i0rx7tz", "text": "Over 4 units is going to be a commercial appraisal which will primarily be based on the income approach so the issue with the BRRRR strategy is you have to get higher rents before it will appraise (and support a bigger loan) whereas in residential you can get a higher value pretty quickly just by getting it into a different set of comps. \n\nYou're also playing in a different term/structure than 1-4 that's typically less favorable. Not saying you can't do it but it takes longer.", "replies": [], "depth": 1}]