Owners who have held Santa Rosa rentals for 15 or 20 years have an advantage a new buyer cannot copy: a property tax bill based on what they paid long ago. In a cash-out refinance, that low tax line is worth real money, because every dollar it saves each month supports more loan.
In short: LendingStreet offers DSCR cash-out refinances on 1-8 unit rentals in Santa Rosa and across Sonoma County up to 75% LTV, qualified on the property's rent with no W-2s or tax returns, a 620 minimum credit score and LLC borrowers allowed. A refinance does not trigger a Prop 13 reassessment, so long-held rentals often qualify for larger proceeds than the same property would at a new buyer's tax bill.
Under Proposition 13, a property is reassessed when it changes ownership or when new construction is added, not when it is refinanced. If you bought a Santa Rosa fourplex in the early 2000s, your assessed value has grown only by the limited annual increases since then, and your tax bill may be a fraction of what a buyer at today's price would pay.
For a DSCR loan, taxes are part of the payment. A lower tax bill raises the ratio, which raises the loan amount the rent can support.
This example is illustrative and not a quote. An owner bought a fourplex near Santa Rosa Junior College years ago. It now appraises at $1,350,000 with a remaining balance of $180,000. Two long-term tenants pay $1,700 each and two newer tenants pay $2,300, for $8,000 in rent. Under the owner's Prop 13 base, taxes are about $800 a month; insurance is $600.
At the full 75% cap of $1,012,500, the ratio is about 0.96x on the owner's actual tax bill. The largest loan that reaches 1.0x is about $967,000, leaving about $787,000 in cash before closing costs.
If the same building were taxed at today's value, about $1,294 a month, the largest loan at 1.0x would fall to about $895,000 and the cash out to about $715,000. The difference, roughly $72,000, comes entirely from the tax base the owner has held onto.
| Item | Your Prop 13 tax bill | If taxed at today's value |
|---|---|---|
| Monthly property tax | $800 | $1,294 |
| Taxes plus insurance | $1,400 | $1,894 |
| Payment at the 75% cap ($1,012,500 loan) | $8,307 | $8,801 |
| DSCR at the 75% cap on $8,000 rent | About 0.96x | About 0.91x |
| Largest loan at 1.0x | $967,000 | $895,000 |
| Cash out before closing costs | $787,000 | $715,000 |
Many owners want the refinanced property held in an LLC. Under California rules, transferring property into an entity can be treated as a change in ownership in some cases, which could trigger reassessment and erase the tax advantage shown above. Transfers where the owners keep the same proportional interests are often excluded, but the details matter, and later changes in LLC membership can count as a change in ownership too.
Talk to a California real estate attorney or tax professional before changing title, and file any required forms with the state and the county. We can lend to an LLC; the question is how and when to transfer title without an unwanted reassessment.
The same caution applies to adding a partner, transferring the property between family members or restructuring after an estate. Each of these can affect the assessed value, and the assessed value is the line in your DSCR that a long-held Santa Rosa rental can least afford to lose.
California's Tenant Protection Act caps annual rent increases on many units and requires just cause for terminations after a tenancy has run for a period. Long-term tenants in a Santa Rosa building often pay well below market, and those rents can only rise gradually. The refinance is sized on the rent you collect, so those below-market units hold the loan down.
If a unit turns over before the refinance, the new lease at market rent helps. Do not plan a cash-out around rent increases you cannot yet charge.
An insurance renewal can raise your payment just as much as a higher loan. Before you refinance, get a current quote, especially if your carrier has non-renewed policies in your area or you are moving to the California FAIR Plan with a difference-in-conditions policy. The new premium goes into the ratio.
How long you need to own a property before taking cash out based on the new appraised value varies by program. Recently purchased properties may be limited to cost plus documented improvements for a period. Our seasoning guide explains the common rules.
Recent buyers are also in a very different tax position from long-time owners. If you bought within the last few years, your tax bill already reflects a recent purchase price, so the Prop 13 advantage in the example above will be much smaller for you. Run the numbers with your actual bill.
Common uses include buying another rental in Sonoma County or in a lower-cost market, adding a permitted ADU to an existing lot, paying off a higher-cost loan, and funding deferred maintenance or fire-hardening work that helps with insurance. Our investor loans are business-purpose loans on non-owner-occupied property.
Building an ADU is worth a note. New construction is assessed at current value, so the ADU adds to your tax bill, but only for the new space; the original building keeps its Prop 13 base. A permitted ADU with its own lease can more than cover that added tax.
Send the address, estimated value, loan balance, current rent for each unit and your current tax bill. We will size the loan at a few levels and show the cash each one produces. Call (877) 298-1001 or use the form below.
No. Refinancing is not a change in ownership. Changes in title, including some transfers into an LLC, can be, so get advice before moving title.
Up to 75% LTV, as long as the new payment clears the program's DSCR minimum. Low Prop 13 taxes often help long-held properties qualify for more.
Yes. The loan is sized on the rent you collect, and rent increases on many units are capped under state law.
LLC borrowers are standard, but transferring title into an LLC can raise reassessment questions in California. Talk to a tax professional first.
No. The loan qualifies on the property's rent, with a 620 minimum credit score.
Seasoning varies by program. Recent purchases may be limited to cost plus documented improvements for a time.
Yes. Proceeds can fund another investment property anywhere we lend.
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