Refinancing a Commercial Loan

[Greggory Kowalkowski]

My partner and I are closing on our first property today. The bank requires this to be done through a commercial loan since we formed an LLC to buy the property. The home needs plenty of rehab and then we wanted to refi down the road. I heard someone mention on one of the podcasts that his commercial loans can be refinanced almost immediately upon completion of the rehabbing. I just wanted to know if this is a widely held industry standard or something this particular investor brokered through a relationship with a local bank?

[Mike H.]

For a commercial/portfolio loan, you can typically refi them immediately after you stabilize the property. i.e. Rehab and get the house rented.

You can even start the refi a little before you finish the rehab if you want - assuming you have a renter lined up and ready to go.

I once had a refi done on a house I bought within 45 days or so of the purchase. Had a renter lined up right after I closed. About 3 weeks into the rehab, I started the refi. Rehab was done in 5 weeks. Tenant moved in the day the rehab was completed.  Refi was closed about 2 weeks after that.

Typically, you want to figure about 4 to 5 mos for the whole process

2 months for the rehab. 2 to 4 weeks to get it rented. 4 to 8 weeks for the refi.