Refinancing vs Portfolio Loans

[Eric Northrup]

I have been in contacts with local banks for over 4 months now in hopes of building a partnership that follows the new ARV (Appraised Rental Value) after renovations. Here's some of my observations...

1. Banks usually love to get you through the pipeline, promising the world to you and that they are familiar with your "BRRRR" Strategy...regardless of how many times you explain it.

2. Often times, I am running into a seasoning period in which I have to hold the house for a certain amount of time. One bank has told me the seasoning period is FDIC! I am in contact with them currently in challenging (very gently) in their argument that this is a federal guideline versus a preference for their particular bank. I am buying cash with these homes through partners.

3. As we go through the process and we get to the end, no matter how good financials look, they want to do a loan based on the cash I have in the property not the new ARV, which is not the BRRR method.

I am not giving up hope as I know there are local banks in the area that does refinancing with no seasoning requirements. Usually, they are smaller, single banks.

Question: Is it worth me starting to have talks with some of these banks regarding a portfolio loan? What is some of the best practices to start these conversations? 

[Andrew Postell]

@Eric Northrup hey, just to reinforce something here - you don't have to wait 6 months.  You can refinance right away.  Even with Fannie/Freddie loans.  Certainly hit us up with any more questions but you can 100% do what you are trying to do.