Frustrated - Refinance part of BRRRR

[Rodney Buford]

Good morning BP,

I am writing this out of frustration partly and also maybe it will help someone else down the road. I was feeling pretty good about my first BRRRR project. Instead of paying someone else rent for my son to live while attending college, I decided to find a property in his college town to fix up and rent out (Duplex).

Everything went pretty well, acquired a hard money loan, hired a contractor (dealt with some issues there), and successfully got it rented out by the bedroom for $300, total income $1200 (2 bedroom 1 bath per side).

My hard money is due at the end of September so I started securing refinancing options at the end of August.  Here is where my challenge started.

I have been through 2 lenders thus far all saying they could do the refinance only to find out after paying for appraisals and submitting all documentation that they couldn't.

• First lender said they could do 80% LTV cash out refinance only to find out the highest they could go was 65% (wasted 2 weeks)
• Second lender said they could do 80% LTV cash out refinance only to find out at the very last minute (wasted 2 weeks) that because my son is living there they consider that an owner occupied property and could not do it.
  • Evidently there is a Fannie Mae and Freddie Mac guideline that prevents me from getting a fixed rate refinance because of my son living in the property which I honestly don't understand.

I am trying to stay positive and mark this down as learning the process.

I pride myself on having tremendous integrity and honesty, so during the process I listed my son on the rental agreements.  Had I put "Joe Bob" on the rental agreement than none of this would be an issue.  I feel like we get penalized for being honest and forthright.

Just needed to vent.  I am facing a hard money penalty now so working through that piece and working with a bank on a 5/1 arm to see if we can do a commercial 5/1 arm cash out refinance.

Not sure where else to turn on this as I don't understand that Freddie Mac / Fannie Mae guideline at all.  Hoping the bank comes through on the refinance.

Thanks for listening,

Rodney