How to Refinance a Quadplex?

[Robert Del Rosario]

Hello community, I'm trying to mitigate some more risk when buying a quadplex. My plan is to buy a quadplex with a private lender and then refinance with a long term lender ... but I'm already concerned that I might not be able to refinance due to poor credit and no income. I understand that it mostly depends on the 'deal' but from what I hear they still look at credit and income. When refinancing what costs are involved and what can I do to make sure they will refinance me?

Also ... if I bought a property at $100k ... can they refinance me at $120k so I can pay off my private lender and then some? Thanks again.

[Jon Holdman]

Unfortunately, your ability to refinance depends mostly on your personal income and credit, and not on the deal. If you had a track record, and were buying a large commercial deal, then the lender might look more at the deal.

If you buy a property for $100K, fix it up, and it has a new higher value, you should be able to refi based on that new value. The LTV will be limited to about 70%, maybe 75% of the new value. You will need to wait at least six months and perhaps a year before you can refinance.

The sticking point with be the credit and the income. You will need to have that property on two years tax returns in order to count on that income. Otherwise, you'll have to have enough income from other sources to support the loan. You will need good credit, 720 or better, though I've heard more recent feedback you need 740 or better.

My recent refi's have been for lower amounts. I'd guess your refi costs to be $4-5K on the loan amounts you're talking about. Some of those are prepaid expenses, like taxes and insurance.