Refinancing a SFR portfolio

[Nicholas Devlin]

What’s going on everyone?

I am currently seeking some answers or advice on how to go about refinancing my portfolio.

Is there anyway to go the commercial route and have the portfolio valued by the income approach?

I’ve spoke to a few brokers that I am currently waiting on answers from but would like to hear some outside opinions from other investors. 

Thanks! 

[Andrew Garcia]

Hi @Nicholas Devlin, it sounds like you want the properties to be valued based on cap rate rather than comps, correct?

If so, that could be tough because the value of any property is what someone is willing to pay for it. In commercial real estate, the purpose of the property is to generate income so those properties are valued based on such.

However, with SFHs, the main purpose is for people to live in. Since most people that purchase homes are purchasing them for personal use, not as an investment property, SFHs are valued based on what homebuyers will pay for it.

Therefore, a lender will have a hard time taking that approach when valuing the properties. With fears of a slight property value pullback looming and the lending landscape tightening, it is especially difficult. In 2020 or 2021 there might have been a lender out there.

With that being said, maybe if you use a portfolio or blanket loan, they will value it closer to a commercial portfolio of SFHs.

Hope this helps! Let me know if I can be of any assistance.