Multifamily

Advantages of Refinancing a Multifamily Property

Here's Why You Should Consider Financing Your Multifamily Property

If you’re looking to grow your real estate investment portfolio or increase the value of your current multifamily property, what are your options?

You could sell your multifamily investment property, but you’ll run the risk of not getting the full value if you sell too early or if the property needs rehab to increase its value. If your multifamily property needs value-add rehab, what can you do if you don’t have the necessary funds? Finding a solution to these problems could be solved by refinancing your current multifamily property.

If you do choose to refinance your multifamily property, what are the advantages of refinancing? In this post, we’ll explore three advantages of refinancing your multifamily investment property and how refinancing can benefit you as an investor.

3 Reasons to Refinance A Multifamily Property

1) Refinancing Could Mean A Lower Interest Rate
One of the biggest advantages of refinancing your multifamily property is securing a lower interest rate. If your intention is to hold onto the property for one to two years before selling, then refinancing out of your current loan into a loan with a new interest rate can increase your monthly cash flow. How? By lowering your “out-of-pocket” costs. Check with your Lima One consultant about what your rates may look like.  Multifamily loan rates with Lima One Capital are based on an investor’s experience, leverage, and whether or not the property needs value-add rehab or is currently stabilized.

2) Pull Out Your Equity in the Property
If you want to leverage the equity you’ve already built into your property, exploring a cash-out refinance is a good investment strategy. With a cash-out refinance, you can cash -out up to 60% of the property’s loan-to-value (how much it is worth as-is) if the property is currently stabilized. This is an appealing option because it allows you to pull the cash straight out of the property, which could then be used to purchase additional investment properties – single or multifamily – and grow your portfolio.

3) Cash-Out Refinance for Rehab Funds
Finally, if you’re looking into refinancing your multifamily property, you also have the ability to refinance and acquire value-add rehab funds for fix and flip projects. If you already own the property, you can refinance it up to 70% of the loan-to-ARV (After Repair Value, or what the property is worth once the rehab is completed), to acquire the necessary funds to complete the rehab. Completing the rehab of a multifamily property increases your property’s value and allows you to hold the property for up to two years, with an additional extension year available, before either selling the property or refinancing again into a long-term loan.

Refinance Your Multifamily Investment Property Today

These three advantages can help you decide whether you should refinance your multifamily property and capitalize on the equity you’ve built while you’ve owned the property. They can also help you complete value-add rehab on the property, which increases the overall value of the property, and in turn increases your cash flow.

Lima One Capital is the nation’s premier lender for real estate investors. We make it easy to finance your fix-and-flip projects, rental properties, and multifamily investments. Lima One’s multifamily loans offers investors both a value-add rehab and stabilized option for their multifamily properties for a bridge term with interest only, and we also offer financing for multifamily long-term holds. Available across the country in 46 states including Washington, D.C., Lima One Capital helps investors take advantage of competitive interest rates and low down payments.

If you’re interested in learning more about the Lima One Capital Multifamily loans and private-lending solutions, contact us today.