How do Medium Term Rentals impact refinancing?

[James Likis]

Hi all,

My wife and I are looking to grow into the commercial multifamily space, but do not yet have experience with commercial lending. We are thinking we'd go after a 5-10 unit building and rent a couple units out as MTRs to increase the NOI.

What we're wondering is how MTRs would impact the refinancing process, if at all? Would we need to show a full years worth of NOI as part of a refinance without 100% of units having a long term lease in place? Or is a years worth of NOI required regardless when refinancing a commercial loan?

Thank you in advance for helping us learn and better prepare to enter this space!