Refinancing Multifamily

[Jay Myers]

Hello, I started buying duplexes and 4plexes about 2 years ago using the BRRR or BURR method. (Buy, update, rent, and refinance). I've purchased 12 properties, 90% of them being 4 plexes. I have a total of 6 conventional loans and a few commercial bank loans in my portfolio. I recently purchased 2 more 4plexes with money from a LOC, which i plan to refinance asap. It is my understanding that I am allowed up to 10 conventional mortgages. However, It is becoming more and more difficult to get these loans approved. Any advice on which mortgage companies are easiest to work with for multifamily financing? I've used Quicken, Stonegate, and NOLA lending so far. I've heard about portfolio loans, but don't really know anything about them? I'm just looking for advise to continue future purchases. I feel I'm about to hit a roadblock in the near future. How do I keep this from happening?

[Luke Grogan]

Portfolio lenders are banks and credit unions that don't package and sell the loans (paper) to investors. They have their own underwriting guidelines and will easily explain them to you. Each bank has a different risk tolerance that they underwrite to, so just start calling all of the local banks and credit unions within about a 30 mile radius to you properties and let them know what you have.

I spent a lot of time doing this and found that the best approach, for me, was to put together a real estate worksheet showing all of the pertinent details (when purchased, how much, how much invested, address, taxes, insurance, net income, and value (I include a link to the trulia page, but that is for my SFR).

In addition, a letter of experience that includes how you underwrite purchases (i.e., assign value and screen your deals), what your goals are going forward, and your use of funds if cashing out. Also have a balance sheet and personal finance statement ready.

Call as many banks in the commercial lending department, focusing on credit unions and smaller regional banks. Also ask for references on aggressive banks. For now, I'd stay away from brokers until you've gotten some feedback from banks. I've yet to find a great broker, mostly just "decent" and they didn't bring me a lot of value. Make it a goal to call 10-15 new banks each day and follow up on messages every three days or so. Also use LinkedIn and if you can find emails, follow up voice messages with the information I mentioned, along with your proposal. This goes a long way in speeding up the process and getting at least a couple of banks interested in funding either this deal or future deals.

From there, set up a few face to face appointments and start negotiating the best terms... Smile and Dial, my friend!