How to find lenders for multiple refinances?

Question

For those of you following the BRRR method, or buy borrow die, etc, could you share how you have been able to get multiple refinances, or mortgages on your properties?

We would like to hold onto as many properties as possible, and just refinance them to pull out our equity as possible. However, we're worried that lenders will look at our portfolio and see all of the debt we have, without seeing the income

For our market, the rents really only cover the mortgage, but appreciation is one of the highest in the country

Brandon Beardt · Answer

Hi Rick,

Many investors utilizing the BRRRR strategy are opting for alternative financing solutions, instead of conventional financing, in order to recapture their capital quickly to keep the process ongoing. You can easily buy a property, do the rehab, and cash out refinance after only 90 days of being on Title with DSCR financing. These lenders wont look at your entire portfolio nor base the qualification off of whether or not these other properties you own are producing any income (unless it's the subject property). With conventional financing, you'll now have to wait 12 months before being able to get the cash out of the property which can drastically increase holding costs (assuming you purchased with hard/private money). In addition, you may have a much tougher time qualifying if your DTI is out of line with your other properties in consideration. It also sounds as if you're trying to refinance the property every year or so to pull out the newly acquired equity through the appreciation, did I understand that correctly? With that in consideration, not sure if you'll have a liking to the prepayment penalties associated with this type of financing, but nonetheless, it's another tool in your arsenal.

If your worry is that lenders will look at your portfolio and review all of the debt you owe, DSCR lenders don't take that into consideration. DTI is not a factor and they only look at the subject property and whether or not it cash flows.

If your worry is that the rent will only cover the mortgage payment, that is exactly what DSCR lenders want. In fact, most just want the projected PITI payment to be equal to the projected market rent for qualification, though, some allow negative cashflow at lower leverage (not ideal IMO).

The good news is, you have options when it comes to the BRRRR strategy, but you'll have to choose one that best suites your needs and goals. Best of luck!

Katherine Blazer · Answer

Sometimes and it depends are what you are comparing them to.

If your goal is to add rental properties to your portfolio and you need liquid cash for the next purchase/down payment. This is why strategizing with a good lender is important.

If you are trying to use primary residence loans on properties that you do not plan to live in... that would be mortgage fraud.

Delwyn A. · Answer

If you are looking to get multiple refinances or mortgages on your properties following the BRRR method, there are several steps you can take:

• * Build a strong portfolio: Lenders will be more willing to work with you if you have a proven track record of successful investments. Build a strong portfolio of properties that are generating positive cash flow and have strong potential for appreciation.
• * Maintain good credit: Maintaining good credit is important for obtaining financing. Pay your bills on time, keep your credit utilization low, and monitor your credit score regularly.
• * Build relationships with lenders: Build relationships with lenders who specialize in investment property financing. Be transparent about your investment goals and plans and keep them informed about your progress.
• * Consider alternative financing options: If traditional lenders are not willing to provide financing, consider alternative financing options such as private lenders, hard money lenders, or crowdfunding platforms.
• * Be patient: Building a real estate portfolio takes time, and obtaining multiple refinances or mortgages may take some time as well. Be patient and persistent, and continue to build your portfolio and relationships with lenders over time.

Overall, obtaining multiple refinances or mortgages on your properties following the BRRR method requires a combination of strategy, persistence, and patience. By building a strong portfolio, maintaining good credit, and developing relationships with lenders, you can increase your chances of success.

Stephanie P. · Answer

You should be able to get a DSCR to work around 75% loan to value.  While conventional has the best rates and terms, a DSCR loan will work to scale if you have cash for the down payment, reserves and closing costs.

Yes, the rates and fees are higher than conventional, but if the numbers work and conventional isn't an option because of your debt ratio, these are the next best option.

Devin Peterson · Answer

Hi Rick, would love to help you out with this - lets connect.

Katherine Blazer · Answer

Hi @Rick Dreyer Congrats on growing!! There are a few funds that allow second loans on investment properties. They have very specific guidelines. Cash-out refinances are a little easier and you can use DSCR loans. It sounds like where rates are currently might make the ratios tight. One last option is a no-ratio loan, they normally do lower LTV.

Chris Davidson · Answer

@Rick Dreyer you are either going to have to have the DTI ratio in check, or have a debt service covered by the income for the refi.

If you can't pay the loan back the banks don't want to make it. Pulling equity out makes sense when you can get a return higher than your cost of capital.

Best of luck!

How to find lenders for multiple refinances?

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