Unlocking Equity in Layered-Risk Scenarios Where Traditional Banks Stop

Most people think accessing equity is simple. But what happens when:

• You’re self-employed
• You own multiple properties
• The property is a non-warrantable condo
• It’s 5+ units
• It’s in an LLC
• You just bought it
• You want 85–90% LTV
• You don’t have massive liquid assets (reserves) sitting idle

That’s when conventional lending starts stacking restrictions. That’s when we start structuring solutions.

The Reserve Requirement Paradox

One of the biggest obstacles on conventional loans is the reserve requirement.  To get cash… you need cash.

In simple terms: A reserve requirement is money the lender requires you have on hand after closing sitting in a bank. It’s a financial cushion.

Lenders measure reserves in months. For example, if your mortgage payment including taxes and insurance is $2,000 per month and the lender requires 6 months of reserves, you must show $12,000 in liquid assets after closing. From the lender’s perspective, reserves mitigate risk if something goes wrong.  Can this borrower keep paying when unforeseen circumstances arise?  To mitigate that risk the banks require a cushion. Conventional lenders often require 6–12 months of reserves especially on multi-unit investment properties.

Borrowers do not understand why their equity or cash they are taking out does not fulfill this requirement. We have access to lenders that allow cash-out proceeds to satisfy reserve requirements and in some cases reduce or eliminate reserve requirements altogether.

That flexibility alone saves deals.

BRRRR Without the 6–12 Month Waiting Period

BRRRR stands for Buy – Renovate – Rent – Refinance (Cash-out) - Repeat

Most traditional banks typically require between 6 and 12 months seasoning after purchasing a home before you can take cash out however we work with lenders that allow a cash-out refinance immediately after purchase.

The speed of capital recycling will drastically improve portfolio growth.

Up to 90% Cash-Out (Even on Seconds)

Traditional financing typically caps cash-out at 70–75% on investment property and 75–80% on primary residences. Certain programs allow combined loan-to-value ratios up to 90% including structured second mortgage options. That unlocks significant liquidity.

Investment Property Second Mortgages

A clients first instinct in the current interest rate environment is to not want to disturb a low-rate first mortgage.

We can structure:

• Seconds on primary, secondary, and investment property
• DSCR-qualified seconds
• Bank statement, 1099, and P&L qualified seconds
• High LTV seconds

There is tremendous benefit in access equity without touching the first lien.

DSCR Cash-Outs can Replace Commercial Loans

We help borrowers move from short-term variable commercial debt into 30-year fixed DSCR loans while still keeping the loan in the name of the business. That improves stability and long-term planning.

Combining Asset Utilization + DSCR

Some lenders allow us to combine:

• Asset depletion income
• DSCR qualification

This is usually a one or the other option.  Being able to use both of these non-traditional income streams and provide cash out is a gamechanger.

Cash out for unique loan characteristics

We can structure cash-out for:

• Non-warrantable condos
• LLC held properties
• Multi-Unit properties over 4 units
• Jumbo loans

The Real Difference: Layered Risk

Traditional lenders may tolerate one elevated risk factor. But when multiple variables stack, underwriting often stops.

•        Self-employed borrower showing limited income

•        LLC property ownership

•        Recent purchase

•        High Loan to Value

•        DSCR with between 0 and 1 ratio allowed

•        Asset utilization

•        Limited reserves

•        More than 4 units

This is where we truly shine. It’s not just that we have a better chance of getting your loan approved. It’s that we have access to a wide range of capital sources. Many more than a typical bank. When multiple lenders can potentially fit a file, we’re not just hoping for an approval. We’re structuring the deal and then shopping it competitively within the right risk profile. That’s structuring. Not haphazardly quoting.

Summary

If you’re an investor, realtor, CPA, or advisor running into “almost works” scenarios — let’s talk.  If you’re a producing loan officer who wants to increase approval-to-close ratios by understanding layered risk structuring — reach out.  And if you’re happy where you are but want to assist your clients when you don’t have a solution in house, I’m always open to referrals.