Cash-Out Refinancing for an Owner-Operated Assisted Living Facility
Specialized properties can present unique financing challenges. This example illustrates how an owner-operated assisted living facility may qualify for a cash-out refinance when the property remains residential in nature and the transaction meets the program's requirements.
The Challenge
The borrower owned and operated a small assisted living facility in a residential property and wanted to access available equity to fund business improvements.
Because assisted living properties may be treated differently from standard residential investment properties, the transaction required a program designed to accommodate eligible care facilities.
The Solution
We evaluated the scenario under the applicable assisted living facility guidelines, using DSCR documentation to assess the property's ability to support the proposed debt.
The proposed structure included a $1.2 million cash-out refinance against a $2 million appraised value, resulting in a 60% loan-to-value ratio. The scenario assumed a 725 credit score and a 1.15 debt service coverage ratio.
The Result
Based on the stated criteria, the scenario appears to meet the key thresholds for credit score, LTV, loan amount, DSCR, ownership, and property use.
Final approval would remain subject to lender review, confirmation that the property is clearly residential in nature, credit-history requirements, pricing adjustments, and any additional program overlays.