How much you can pull out, what the money can fund, and the two constraints that size every cash-out: value and income.
You replace the existing loan with a larger one against the current value and keep the difference at closing. If a building is worth $2,000,000 with a $900,000 balance, a 70 percent cash-out supports a $1,400,000 loan: the old note is paid off and roughly $500,000, less costs, comes to you. The money is yours to deploy, and on investment property the common uses are the next down payment, renovations that raise rents, or buying out a partner.
Value sets the ceiling: most commercial cash-out programs cap at 70 to 75 percent loan-to-value, a notch below what the same programs allow on a purchase. Income sets the floor underneath it: the new, larger payment still has to clear the lender debt coverage minimum, typically 1.20x to 1.25x. On strong-rent properties the LTV cap binds first; on thinner income, DSCR shrinks the loan no matter what the appraisal says. Our calculators run both in a minute.
Many programs want six to twelve months of ownership before a cash-out, though bridge and private lenders will move sooner on the right deal, especially when the value increase came from documented improvements. Expect the standard package: rent roll, operating statements, and a current personal financial statement. Lenders also ask what the cash is for, and a concrete answer, like a signed contract on the next property, strengthens the file.
Against a line of credit, a cash-out usually offers more dollars at a lower fixed rate, at the cost of resetting the loan on the whole property. Against selling, it keeps the asset and the depreciation. Against a 1031 exchange, it is the tool for pulling equity without a sale at all. Which one fits depends on the next move, which is exactly what a deal brief conversation settles.
Most commercial lenders want a minimum of 1.20 to 1.25, meaning the property produces 20 to 25 percent more income than its annual debt payments. Stronger ratios earn better terms; below 1.0 the property does not cover its own payment.
Divide net operating income by annual debt service. A property with $200,000 of NOI and $127,220 of annual loan payments has a DSCR of 1.57.
Usually not from a bank, because the property does not cover its payment. Interest-only bridge financing can carry a transitional property while income is built to a level conventional lenders will finance.
Yes, substantially. Removing principal from the payment lowers annual debt service, which is why bridge lenders quote interest-only and why the same NOI supports a much larger interest-only loan.
Send the property, the loan amount, and your timeline. We will tell you whether it looks like something we can help with, usually within one business day.
Submit Deal DetailsNot ready to submit? You can build a one-page deal brief in three minutes first.
Or just call: 801-706-2802