If you bought a Dallas apartment building or retail strip several years ago, renovated it and raised the rents, a good part of your net worth may now be sitting in that building's equity. A commercial cash-out refinance turns some of that equity into cash for the next deal, as long as the property's income can carry the larger loan.
In short: LendingStreet offers commercial cash-out refinance loans to Dallas investors who own stabilized, cash-flow-positive commercial property or 9+ unit multifamily. The new loan is sized on stabilized NOI, DSCR and LTV, on custom terms up to $5M+, and max leverage varies by program, property type and balance. The cash can fund your next acquisition, capital improvements or other business purposes, and in Dallas the property tax bill and insurance quote often decide how much you can take out.
Cash-out is for investors who already own a stabilized building: occupancy is steady, collections match the rent roll and the operating statements show the income. Typical Dallas examples include a renovated 1960s or 1970s garden building in Lake Highlands, a brick apartment building in Old East Dallas, a fully leased neighborhood retail strip, or a storefront mixed-use building in Bishop Arts that has been re-tenanted.
If the property is still in lease-up or renovation, the income is not stabilized yet. In that case a commercial bridge loan, or waiting until the new rents appear in the operating statements, is usually the better path.
Two limits apply, and the lower one wins. The LTV limit is a percentage of the current appraised value. The DSCR limit is the largest loan whose estimated annual debt service the stabilized NOI can cover with the required margin.
On older Dallas buildings whose values have risen, the DSCR limit often binds before the LTV limit, because taxes and insurance have climbed along with the value. Cash available is the new loan amount minus the existing loan payoff and closing costs.
| Limit | What it uses | When it usually binds |
|---|---|---|
| LTV | Current appraised value from a full commercial valuation | Buildings with strong NOI relative to value |
| DSCR | Stabilized NOI and estimated annual debt service | Buildings with high taxes, insurance or expenses relative to value |
| Seasoning and history | How long you have owned it and the operating track record | Recently purchased or recently renovated property |
This example is illustrative and not a quote. An investor bought an 18-unit brick apartment building years ago, renovated the units and now has stabilized effective gross income of $318,000 and operating expenses of $123,000, including current Dallas County taxes and a new insurance quote. NOI is $195,000. A new valuation is assumed at $2,600,000, and the existing loan balance is $900,000.
At 70% LTV the new loan is $1,820,000, estimated annual debt service is about $154,361 and DSCR is about 1.26x. After paying off the existing loan, about $920,000 is available before closing costs. At 65% LTV the loan is $1,690,000, DSCR is about 1.36x and about $790,000 is available.
If the next tax bill rose by $12,000, NOI would fall to $183,000 and DSCR at 70% LTV would be about 1.19x. That still covers the debt, but it shows why the tax line deserves a hard look before you choose a loan amount.
| Item | 70% LTV | 65% LTV |
|---|---|---|
| Appraised value (assumed) | $2,600,000 | $2,600,000 |
| New loan amount | $1,820,000 | $1,690,000 |
| Net operating income | $195,000 | $195,000 |
| Estimated annual debt service | $154,361 | $143,335 |
| DSCR | 1.26x | 1.36x |
| Existing loan payoff | $900,000 | $900,000 |
| Cash before closing costs | $920,000 | $790,000 |
Our investor loans are business-purpose loans on non-owner-occupied property, and cash-out proceeds should go to business purposes. Common uses we see in Dallas files:
A refinance is not a sale, but Dallas property values are still reappraised. The Dallas Central Appraisal District can raise the appraised value from year to year, and on a building whose rents and condition have improved, that increase can be meaningful. Owners can protest the value each year, and many commercial owners do.
We underwrite on the current tax bill and look at whether it is likely to move. Texas is a non-disclosure state, so the appraisal district does not see private sale prices, but its values tend to track the market over time. Confirm the current rate and value with the appraisal district before you request a quote.
A cash-out refinance needs a current insurance quote, not the premium you locked in years ago. In North Texas, hail exposure and percentage-based wind and hail deductibles have pushed commercial premiums higher, and that line goes straight into NOI.
The property-condition review on a refinance looks at roofs, parking, plumbing and anything deferred. If a roof is near the end of its life, it may make sense to use part of the cash-out to replace it, and to show that plan in your request.
Commercial cash-out refinances take longer than residential refinances. A full commercial valuation, a rent roll and lease review, and environmental and property-condition reviews are common. Have these ready:
Send the address, property type, rent roll, T-12, current loan balance and the cash you are hoping to take out. We will size the loan on both LTV and DSCR, show where the limit binds and tell you what the realistic range of cash-out looks like. Get a quote with the form below or call (877) 298-1001.
Yes, on 9+ unit multifamily that is stabilized and cash-flow positive. Buildings with 1 to 8 units are refinanced under our residential DSCR programs.
The new loan is the lower of what the LTV limit and the DSCR on stabilized NOI allow. Your cash is that loan amount minus the existing payoff and closing costs. Max leverage varies by program, property type and balance.
Yes. Cash-out loans are sized on stabilized income. If you are still renovating or leasing up, a bridge loan or a later refinance is usually the better fit.
Usually the DSCR limit is binding. Higher Dallas property taxes and insurance reduce NOI, and lower NOI supports a smaller loan.
Yes. Funding the next acquisition is one of the most common uses. Proceeds should be used for business purposes.
Yes. Retail, office, flex, self-storage and mixed-use property can be refinanced with cash out if the income is stabilized and the leases support the NOI.
Yes. LLC and other entity borrowers are standard, and most Dallas commercial property is already held in one. Recourse varies by program, and some programs ask principals to sign for the loan personally.
Longer than a residential refinance. Plan for a full valuation, lease and rent roll review, and environmental and property-condition reviews.
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