Key takeaways
- At 7%+ rates, 75% LTV often breaks cash flow.
- Consider 70% LTV with smaller cash-out.
- Underwrite refi rate + 1% stress.
- Long-amort (30y) preserves cash flow.
- Don't refi if it kills DSCR.
Core concepts
Rate sensitivity
Each 100 bps adds $80–120/mo per $100k loan.
LTV vs cash flow tradeoff
Lower LTV = less capital out + better cash flow.
Amortization choice
30y residential vs 25y commercial — pick longer.
Step-by-step framework
- 1Stress refi rate at +100 bps.
- 2Test 70/72/75 LTV scenarios.
- 3Pick LTV that keeps DSCR ≥ 1.25.
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Common mistakes to avoid
- Refinancing to max LTV regardless of DSCR.
- Ignoring rate trajectory.
- Short amortization on hold property.
Frequently asked questions
Cash flow vs capital recycling?
Cash flow first, recycle second.
When skip refi?
If DSCR < 1.15 at any LTV.
Refi later if rates drop?
Yes — PPP permitting.
ARM acceptable?
Only if exit plan is 5 years out.
Action checklist
- ☐Refi rate stressed +100 bps.
- ☐Three LTV scenarios.
- ☐DSCR ≥ 1.25.
- ☐Amortization 30y.
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