Refinance Your Commercial Mortgage (and get cash out)
Our No Income Check cash out commercial refinance loans for owner-users of business real estate makes it so easy to qualify. Plus, we work one-on-one with you on a personal basis from application through closing, providing the expertise for a quick and simple process. Loan amounts begin as low as $175,000.
What is a Cash out Commercial Refinance?
A cash out commercial mortgage refinance (or “refi”) is when you retire the original mortgage on your investment commercial property or owner-user business real estate and create a new mortgage. When the original mortgage is retired and the amount advanced on the new mortgage (which will be based on the current market value) exceeds the existing loan balance – you pocket the difference.
The extra loan amount is available as a “cash out” to the property owner.
How to Pull Equity Out of a Commercial Property
The cash out commercial refi is an effective technique of putting your property into position to refinance the current loan and pull out your original down payment and a portion of your accumulated equity as cash.
This is a strategy most often utilized by savvy syndicators of commercial real estate deals – pulling out invested cash so they can pay back their investors and continue to hold the property at 100% ownership. This also makes them very popular with their limited partner investors who will be lining up to do another deal with the syndicator. Most importantly, the cash-on-cash return after you have pulled out your original cash investment in the deal becomes technically unlimited.
Commercial property owner-users have unrestricted use of the cash out proceeds from their business real estate and can use the cash to renovate the property, buy another property to grow their real estate portfolio, and pay off debts. The end-game with the commercial cash out refi is to take advantage of opportunities and build wealth.
Commercial real estate investors understand the strategy of positioning a commercial property for a cash out refinance, but commercial owner-occupants are also discovering the benefits of using this technique to:
- Rescue Trapped Equity to free their trapped equity for improved liquidity
- Get Tax-free Cash to renovate their property, buy more property for expansion, pay off business loans and tax bills
- Save on Interest by taking advantage of the savings from historically low interest rates
- Lower Monthly Payments to improve their business cash flow from lower mortgage payments
- Avoid Balloon Payments near the end of their existing mortgage loans
Most Property Types are Eligible
Some of the properties that are ideal for refinancing a commercial mortgage include multifamily, automotive, warehouses, retail, light industrial, office, self-storage, mixed-use and rental properties.
Avoid the frustration of dealing with banks.
Don’t waste time with your local bank – they will only say no to cash out refinancing or restrict how you use your cash out.Mike C., who refinanced his Norfolk, VA auto repair shop with Edgeworth Lending
As a private lender, we have no restrictions on how you use your cash out, and you get all your cash at closing. Also, since private lenders are not subject to the same strict regulations as banks, you will benefit from greater LTV’s, getting you the most out of your business and investment real estate.
Easy to Qualify for a Cash out Commercial
Every loan scenario is unique but when you are refinancing a commercial mortgage, the requirements for approval are pretty simple.
The basic loan requirements when refinancing include:
- Personal credit score: Lenders want to know you are someone who’s responsible with your finances and pay off debts. Your credit score will give an insight into your ability to manage debt. A 640 or higher FICO score is preferable but “NO FICO” programs are available.
- Repayment ability: Lenders want to see that you can repay the loan. The most common metric they use for this is your Debt Service Coverage Ratio (DSCR), which is calculated by dividing your business’s net operating income by your annual loan repayments. You’ll want a ratio of 1.0 or higher but “NO DSCR” programs are available.
There are No Doc commercial loan options available, typically for small balance commercial mortgages (under $500,000), that can simplify the process.
What are the Current Interest Rates for Commercial Mortgages?
Commercial loan interest rates can are fluid with the market so many real estate investors try to stay on top of the most recent interest rates to know if they’re getting a good rate. If you are in the process of deciding whether or not to refinance a commercial property you already own, it is important that you can calculate the savings and potential increased cash flow you can achieve with a refinance
Commercial loan rates can range between 4.50% and 12.00%+, depending on the loan product. Quotes for commercial loans depend on several underwriting factors including the property location, loan-to-value (LTV), debt service coverage ratio (DSCR), property utilization (is it for investment or is it an owner-user business property), property type, and the borrower’s credit score.
Here are the current 5, 7, & 10 year swap rates, treasuries, and current Libor rates. These are the most common index rates used when pricing commercial real estate financing. A loan quote will most likely quote a “spread” over one of these index rates.
Contact us today of expert guidance and quick approvals. Call 540-242-0933 or fill out the “Contact Me” form below.