Advantages of Refinancing a Multifamily Property

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

You could sell your property, but there’s the risk of not getting the full value if you sell too early or if the property needs rehab to increase its value. If it 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, what are the advantages of refinancing? In this post, we’ll explore three advantages of refinancing your multifamily property and how refinancing can benefit you as an investor.

1) Lower Interest Rate

One of the biggest advantages of refinancing your multifamily property is a lower interest rate. If your intention is to hold onto the property for one to two years, then refinancing out of your current loan into a loan with a new interest rate can increase your monthly cash-flow by lowering your “out-of-pocket” costs. Rates with the Lima One Capital Multifamily program can go as low as 7.5% based on 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 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 properties – single or multifamily – and grow your business.

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. 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 increases your property’s value and allows you to hold the property for up two years, with an additional extension year available, before either selling the property or refinancing again into a long-term loan.

These three advantages can help you refinance your property and capitalize on the equity you’ve built while you’ve owned the property and can also help you complete value-add rehab on the property, which increases the overall value of the property, and in turn increases your monthly 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 projectsrental properties, and multifamily investments. The Lima One Capital Multifamily program offers investors both a value-add rehab and stabilized option for their multifamily properties. Available across the country in 41 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 program,
click here.