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Keeping the ‘exit’ open with your investment properties is vital, and one of the best ways to make sure you always have an exit is to watch your LTV or commercial refinances.
Too many people are focused on taking too much value out on refinance to enable them to ‘recycle cash’ but it can really distort things and create bigger issues later on.
Very few people keep their properties for as long as they were expecting - selling early due to myriad of factors such as:
JV partners wanting or needing money out
Falling out with the business partners
Change of strategy (desire to go into development or commercial common)
Change in tenant demand or viability of product
Had enough being a LL anymore
All of these happen and the biggest hurdle when they crop up is that the landlord can’t sell their asset for a fair price because they refinanced on a ‘commercial mortgage’ and ‘took all their money back out’ just after the refurb or add value phase.
Remortgaging and keeping the property beyond the existing loan is an issue too if the first mortgage was obtained on bloated terms.
Taking money out of deals can be a problem, but taking too much out on the wrong property or circumstance can cause problems down the line.
However, rest assured that we are here to expertly guide you on how to make the right investment choices for your portfolio.
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