Refinance my BRRRR property

[Lior Nissim]

Hey!! I'm signing my first BRRR property this week, and have a financial question:

If you get the deal with hard money loan, how do you refinance it after the rehab? I don’t think the hard money loans company refinance… 

I got the hard money loan under my company’s name, but my company wouldn’t qualify for regular mortgage. Do I need to sell the house to myself? 

Thanks!! 

[Roi Ford]

Good Afternoon Lior,

Selling should be your very last option. Especially if your goal is to rent the property. You will need to contact a traditional lender, one that has non-owner occupied investor products. If you don't know any, you can start with your local bank or credit union. You'll be looking for a conventional loan, and will most likely be capped at an LTV of 80-85% for a cash out refi, so make sure your numbers are solid.

I am an Agent here in Las Vegas, with multiple contacts, so if you need some referrals let me know.  

All the best,

Roi

[Eliott Elias]

You would refinance with a DSCR loan @Robin Simon can help 

[Jack Mawer]

There are lenders out there who can do both the fix/flip as well as the DSCR loan for the refinance in house. This makes for a smooth transition and ensures you have constant communication with the lender throughout the process. The DSCR loan is a perfect substitute for not being able to qualify for a conventional mortgage - it is light doc, has quick closings, and uses your FICO as well as the property cash flow for underwriting purposes rather than having to prove income, provide tax returns, etc.

[Kevin Woodard]

Quote from @Lior Nissim:

Hey!! I'm signing my first BRRR property this week, and have a financial question:

If you get the deal with hard money loan, how do you refinance it after the rehab? I don’t think the hard money loans company refinance… 

I got the hard money loan under my company’s name, but my company wouldn’t qualify for regular mortgage. Do I need to sell the house to myself? 

Thanks!! 

First, congrats! 

If you have any questions I'd be happy walk you through what many others have mentioned. DSCR loans are great products for these very scenarios. What type of lease are you looking to put in place post-rehab? 

[Jacob St. Martin]

I agree with what others have said about using a DSCR or traditional loan product. I would also add that the exit of a BRRRR is one of the most important pieces. In the future it would be wise to talk to lenders and have the exit for your BRRRR lined up before you sign anything

[Andrew Postell]

@Lior Nissim thanks for posting. You have some good comments above. Refinancing is not difficult if you know the rules. Even having the property in your company name is not an issue. If you know what you need but just need it in your area I would strongly suggest networking with other investors in your area. I appreciate how everyone gets business but how do you know if someone is any good? If a fellow investor has already worked with them that's usually a pretty good indicator. So visit your local REI groups. There are many groups that meet across the country. Some post here on the Bigger Pockets Marketplace. Many post on meetup.com. Even facebook will have some. Networking is always a great practice and you never know who you might meet there and what good information they have to share.

Hope all of that makes sense.

[Caroline Gerardo]

Before you close you need the refinance strategy approved by a real lender with a license in the state where located to see what your options are to exit. 

[Jonathan Taylor]

@Lior Nissim lots good info here. You can easily refinance in your LLC with a DSCR loan. If you have W-2 income and strong tax returns then a conventional loan would garner lower rates but you have to close in your personal name.

Either way, you have simple and easy options to refinance.

[Dylan M. Davis]

You need a private company that will handle your acquisitions and exit into perm financing. 1-4 unit investment property DSCR cash-out refinance are at 75% LTV after 6 months seasoning.

[Erik Estrada]

Quote from @Lior Nissim:

Hey!! I'm signing my first BRRR property this week, and have a financial question:

If you get the deal with hard money loan, how do you refinance it after the rehab? I don’t think the hard money loans company refinance… 

I got the hard money loan under my company’s name, but my company wouldn’t qualify for regular mortgage. Do I need to sell the house to myself? 

Thanks!! 

You can refinance into a DSCR loan. If you are looking to pull some cash out though, be aware of the seasoning requirement. Typically 3-6 months.

[Nick Belsky]

@Lior Nissim

Most BRRRR investors look to get full LTV cash outs and get into perm financing. There are still a few lenders doing up to 80LTV with no seasoning period.

I would steer clear of HML after the initial loan for long term goals.

Cheers!

[Nate Sanow]

The refi part is relatively easy and simple and the more you do it, the more you will find there are a lot of lenders who will do that loan. Happy to discuss further if you have questions but seems like it’s been answered. Good luck. 

[Dawson Rosenberg]

No do not sell. refinance out of the hard money loan. i would love to share some advice with you. let me know if still interested