Many Austin investors bought commercial property years ago and have watched values rise around them. A cash-out refinance turns some of that equity into cash, but the new loan is sized on what the property earns now, after today's taxes and insurance, not on what it is worth on paper.
In short: LendingStreet offers commercial cash-out refinance loans in the Austin metro on stabilized, cash-flow-positive commercial and 9+ unit multifamily property, with custom terms up to $5M+. The new loan is sized on current NOI, DSCR and LTV, so higher property taxes and insurance can limit how much cash comes out. Cash can fund new acquisitions, capital improvements or other business purposes.
A cash-out refinance fits an owner with a stabilized property, steady collections and meaningful equity. Common Austin examples include a retail strip in Round Rock bought a decade ago, a 9+ unit building in East Austin that has been renovated and leased up, a small office building near the Domain area, or a mixed-use building on South Congress or Burnet Road.
If the property is still in lease-up or mid-renovation, it is not yet a cash-out candidate. A commercial bridge loan, then a cash-out refinance once the income is in place, is the usual path.
Cash-out is also a fit for investors who used a bridge loan to buy and reposition a building and have now reached stabilization. The cash-out pays off the bridge and can return some of the equity created by the work, as long as the new NOI supports the debt.
A cash-out refinance is not the only way to unlock equity. A rate-and-term refinance replaces the existing loan without pulling cash, which can make sense when a maturing loan is the main concern. A sale turns all of the equity into cash but ends your income from the property and may carry tax consequences you should review with your own advisor.
A cash-out keeps the property and its income while freeing some equity for the next deal. The tradeoff is a larger loan and higher debt service, so the property must still clear the coverage test with a cushion. If the numbers are tight, taking a smaller amount of cash is usually better than stretching the loan.
Cash-out and other permanent loans need stabilized income. We look at the trailing 12 months, the current rent roll and the leases to confirm the income is real and likely to continue. Strong recent occupancy, leases with remaining term and an operating history that matches the rent roll make the strongest file.
The new loan is the lower of what the LTV limit allows and what current NOI supports at the required DSCR. Max leverage varies by program, property type and balance, and cash-out loans are often sized more conservatively than purchases. From that loan amount, we subtract the payoff on your current loan and closing costs to get your cash.
Many Austin owners find that coverage, not value, sets the limit. Values rose quickly, but taxes and insurance rose too, which squeezes NOI. Commercial leases with tax and insurance pass-throughs help protect NOI, while gross leases leave the owner carrying those increases.
This example is illustrative and not a quote. An owner has a fully leased retail strip in Round Rock with an assumed value of $3,000,000 and an existing loan balance of $1,150,000. Scheduled rent is $325,000 a year, underwriting applies 8% vacancy and credit loss, and after taxes, insurance, common area costs, repairs, management and reserves, NOI is $228,000.
At 70% LTV the new loan is $2,100,000, with estimated annual debt service of $182,147 and a DSCR of about 1.25x. After paying off the existing loan, the owner would receive about $950,000 before closing costs and any required reserves.
| Line | Amount |
|---|---|
| Value (assumed) | $3,000,000 |
| NOI (assumed rents and expenses) | $228,000 |
| New loan at 70% LTV | $2,100,000 |
| Estimated annual debt service | $182,147 |
| DSCR | 1.25x |
| Existing loan payoff (assumed) | -$1,150,000 |
| Cash to owner before closing costs and any required reserves | $950,000 |
Our investor loans are business-purpose loans on non-owner-occupied property. Cash-out proceeds are typically used for business purposes tied to your investing.
Texas has no state income tax, and property taxes are high and set locally. The Travis or Williamson central appraisal district reappraises each year, and owners can protest. A refinance does not reset the value the way a sale often does, but a long-held property may still have seen large increases. We underwrite on the current bill; confirm it with the appraisal district.
Insurance premiums in Central Texas have climbed with hail and storm losses. Get a current quote, since renewals can change the NOI that sizes your loan. Texas has special cash-out rules for homesteads, but they do not apply to investor-owned commercial property.
A commercial cash-out needs a full valuation. Because Texas is a non-disclosure state, appraisers have fewer verified sale prices to work with, which can make values harder to support. Expect lease review and often environmental and property condition reports. Commercial refinances take longer than residential ones, so start well before you need the cash.
Send the property, current loan balance and rent roll using the form below or call (877) 298-1001. We will run the NOI and coverage and tell you how much cash the property can likely support before you order third-party reports, so you can plan your next move.
It depends on the lower of the LTV limit and what current NOI supports at the required DSCR, minus your existing loan and closing costs.
Yes. Cash-out loans need stabilized, cash-flow-positive income. Properties in lease-up or renovation usually start with a bridge loan.
Usually because coverage limits the loan. Higher taxes and insurance reduce NOI, and the new loan has to clear the DSCR test.
Yes, if it is stabilized and the NOI supports the new debt.
No. Those rules are for homesteads. Investor-owned commercial property is a business-purpose loan.
Business purposes such as buying more investment property, capital improvements, paying off a bridge loan or buying out a partner.
Yes. Commercial cash-out loans require a full valuation of the property.
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