Lenders for multifamily investment (4 units) in Houston

[Felipe Carrillo]

Hi BPers,

Looking at a multifamily property (4 units) that needs a considerable amount of repairs (~50k). Does anyone know of a lender that is willing to lend for the repair costs as well as lending for the long term, once the property has been rehabbed? Essentially thinking of the BRRR strategy for this multifamily property but trying to avoid the costs of having to close twice, which I'd have to do if I were to go with private money to make repairs and then refinance into "conventional" financing. Any tips would be greatly appreciated.

Thanks!

[Andrew Postell]

@Felipe Carrillo and @Maurice Walker i thought I might as well tag you both just in case it was helpful.

A couple of loan options were mentioned above and I wanted to clarify here:

If you were to occupy this property this would be an entire different discussion.  I will assume this is an investment property for the sake of this discussion (if different please let me know):

For multi-family renovation loans there is no "agency" solution. 203(k) loans are an FHA product....which means you have to occupy. Fannie Mae HomeStyle is a renovation loan that can be applied to Single Family Home investment properties....but not 2-4 unit investment properties.  HomeStyle can be applied to owner-occupied 2-4 units just for reference.

So that leaves us with portfolio/commercial solutions or hard money solutions. What generally occurs in these scenarios is that a short term, commercial or HML is used and THEN using a Fannie/Freddie type of loan to refinance out into your permanent financing. This does mean some extra costs....payments to the short term loan, 2 sets of closing costs, etc. So that generally means you just need to adjust your offer a little bit to compensate for this.

In Texas, the general commercial style loan in this scenario is a 20 year Adjustable Rate Mortgage.  There are a good number of investors that just stay in that loan.  So you don't HAVE to refinance out of something like that if you don't want to but I think if you used Hard Money you would HAVE to refinance.  Those commercial loans would likely come from smaller, local lenders.  So I know a few up in Dallas-Fort Worth...but they don't lend in Houston.  And probably the same for the Houston lenders not lending up here.

I hope that helps in some way.  If you are looking for specific lenders for this type of product feel free to post in the Texas forum itself.  There are plenty of us in that forum and we tend to have a lot of participants from Texas in Bigger Pockets.  Might be a good place to ask for this sort of thing.

@Scott D Burrows thanks  for the mention.  Feel free to tag me with any other questions.  Good luck!