You may hear the term "cash out refinance" when people are talking about getting a new loan on rental property. But, what does this actually mean?
To explain the concept in very simple detail, it means that if you bought a house for cash & then took it to a bank to refinance 75% of the appraised value back out. Why this is such a common idea for real estate investors is because they can find deeply discounted off market properties, rehab them, & then take them to a bank & refinance all of their money out! It is the perfect scenario for building a portfolio of off market houses.
Is this possible to do with commercial assets? The answer is yes! You will still need to abide by the same rules & formula, but most commercial lenders will go up to 80% LTV on the commercial side of the business. This can allow you to build a mega business with just a few great relationships.
Make sure that when you meet & connect with a local lender that you are personable & build a relationship. Relationships help build business & that's what the real estate game is all about!
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