Portfolio Cash-Out Refinances

[Stephen Lee]

I have about 5 properties that are ready to be refinanced via the BRRR strategy right now. Would it be better to refinance using 5 different loans, or combine them into some sort of a portfolio refinance? If a portfolio is the best option, should I combine all 5 into one portfolio loan, or should I wait for other properties that I have in the pipeline to do 10 at once? 15? What would the sweet spot be?

I've been out of college for not even a year now, so my tax returns show $0 for the past 3 years. That is obviously the biggest hurdle that I've been facing with these refinances. The rates that I've been quoted have been up around 9.7% for a 30 year fixed. 

[Chris Mason]

Originally posted by @Stephen Lee:

I have about 5 properties that are ready to be refinanced via the BRRR strategy right now. Would it be better to refinance using 5 different loans, or combine them into some sort of a portfolio refinance? If a portfolio is the best option, should I combine all 5 into one portfolio loan, or should I wait for other properties that I have in the pipeline to do 10 at once? 15? What would the sweet spot be?

I've been out of college for not even a year now, so my tax returns show $0 for the past 3 years. That is obviously the biggest hurdle that I've been facing with these refinances. The rates that I've been quoted have been up around 9.7% for a 30 year fixed. 

If you've got 5 strongly cashflowing rental properties, you may be able to get at least one or two cash out refinances knocked out just based on the rental income, and then do the HML for those last few after you've squeezed Aunt Fannie Mae for all the cheap borrowed money she will lend you.

If you're living rent free in a home owned by someone else that does not charge you rent (eg, if you moved back in with family after college), and have little/no consumer debt, it might even be a slam dunk for all 5. "Dear Mr. Lender, Stephen is my son, he lives with me at 123 Main St which I own, and I do not charge him rent" - guess who now has a 0.000% DTI? You do, that's who. I have a client that is from a culture where you live with parents until married who does this with pretty close to zero mortgage qualifying traditional job income, just her rentals. I joke with her that she isn't allowed to get married unless I sign off on it... for example if he already owns a home then he can write that same "living rent free" letter as above, then I'll "preapprove" her marriage. :P

But you aren't likely to have luck by walking into a credit union or calling a 1-800 number, nimble-minded lenders are not to be found at those "W2-only" sources. I'd start by finding a local REI friendly lender that'll entertain your scenario, give you the time of day, and run numbers. @Michael Cohen might give it a whack - almost any traditional residential lender on BP is going to be strong in the "how far can we push things while avoiding hard money?" front.