What is the avg hold time lenders require for apt complexes before one can do a cash out refi?

In Buying Property - Asked by Kyle B. - May 28, 2009
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Answer(s)

Leslie H. C.
Broker/Agent
Denton, TX

The hold time is not as important as the performance of the property. Due to the cost of refinancing a property the hold time is more of a component of your ability to justify the additional cost. Most lenders could care less if the existing loan in one month old or 5 years old. If the deal satisfies the lenders underwriting requirements and you are willing to pay them all the fees involved, they are happy to do the deal. They only make money by lending money. You could effectively refinance every 30 days if you did not mine giving away money every 30 days. Today the equity requirement is greater than it was 18 months ago. The lender will have a 3rd party appraisal done and they will lend you a percentage of the value of the property based on their perception of risk. Leslie H. Cox has over 20+ years practicing commercial real estate.

Jun 2, 2009
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Willis C.
Lender/Mortgage Broker
Charlotte, NC

In today's market the most aggressive multi-family lenders are Fannie/Freddie. Unfortunately parameters have tightened recently and the maximum loan to value for a cash-out request is 75% LTV. The issue on timing is that they are now requiring a 6 - 12 month period of stabilized occupancy levels when underwriting vacancy/expenses. That said, in order to increase the property's value enough to cash out, you will need to improve the occupancy/cut costs and prove it out for a longer period than what we used to have to do (used to be able to get away with 90 days or less). Another thing to consider here is the prepayment penalty of the old loan. One advatage of the GSE programs is that you can take out additional proceeds twice (at least with Fannie) once you have increased the property's value. You can do this without prepaying the existing note, you are simply adding to it.
If you have an interest in looking at Fannie/Freddie financing options, give me a call at 704-686-4634.
Willis C.

Jun 4, 2009
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