Can I refinance a shared living community?

[Juan Escarcega]

Hi all!

I own a duplex near USC in South Los Angeles that I was looking into converting to a triplex, but was presented the idea of a shared housing community by a contractor friend of mine. After speaking with some private lenders, I'd be eligible to finance the remodel from duplex to triplex based on the ARV, but the cash flow would be significantly less than the shared housing and the remodel much more costly. Obviously I'd like to spend less on the rehab and cashflow more, but it kind of botches my exit strategy.

2 part question:

A. Because I would be keeping it as a duplex and not adding much value to the property itself, although the cashflow would be great, it would reduce the ARV and am not sure how private lenders would look at something like this. Any ideas on creative financing, or is this something that lenders can work around?

B. After the remodel is complete, my renters would consists of many short term leases which are not accepted by my banks for refinancing and I’m unlikely to personally qualify for the refi on my own. Are there banks that will take on these types of properties based on cap rates?