The current interest rate environment has put a damper on a lot of investor's plans to execute a cash out refinance. If you didn't move quickly to execute your value add you might find yourself stuck in a similar situation. While it's always best to have a plan for how you are going to execute your exit strategy BEFORE you get started, if you're like me and just jump in you could easily find yourself wondering how to execute this plan if your initial plan runs into problems.

BP is full of great advice on refinancing and if you just post that is what you're looking for, the vendors will come out of the woodwork. That's one way to do it, and if that works for you then do that. However, I often like to do business with vendors who are recommended to me. No, this isn't a pitch for some of my friends who do lending. :-) Assuming you have your basic underwriting skills honed, and you find yourself with no plan, or a primary plan that doesn't work, here is what I would do:

1. Talk to the person who sold you the deal initially to see if they have a recommendation for a lender (local bank, credit union, DSCR guy, or Hard Money). If some time has gone by this should be a very easy conversation to have. There is just no pressure for them to be anything but honest.

2. Attend meetups. This is a bit easier if you are local, of course. Tell everyone who will listen exactly what you need. You will get plenty of references.

3. Talk to your PM if you aren't local. They should definitely be able to give you the contact information for lenders actively loaning in the area.

Now that you have 3-5 potential lenders it's time to work the phone and call them. Make it easy on them and yourself. Go into any conversation with a potential lender knowing what you want, like a 15 or 30 yr amortization, 75% LTV cash out, minimum loan value etc. Then make certain they can offer what you need. There is no sense in speaking to a DSCR guy who can only offer a 15 year am if you need 30. Next, ask about their underwriting. Does the lease need to be submitted for their approval? Is there a seasoning period? If it's a non recourse DSCR to they pull your credit, and what is that requirement? Finally, understand who is the approver for any loans. Are you speaking with a person with no lending authority, or are you speaking with the person who can approve the loan personally. Get it all out there on the first call. Think speed dating, not romantic dinner. Assuming you have a lender who fits what you need, and the end of this call you should know whether your deal is financeable through them, pending of course appraisal or whatever else is outside of your control.

I personally avoid any lender who says "We can sometimes make exceptions to do "x, y or z"." My experience is that is a kind way of saying "We will add 200 basis points to our quote because your deal isn't normal for us."

I also avoid anyone who can't give me a straight answer that allows me to underwrite the new loan myself to see if it's something I want. If I need to undergo a colonoscopy to determine if a lender makes a 30 year loan to people with an 815 FICO at 85% LTV with an in place tenant and monthly income of $1400 with a market value of $125,000, or if you can't tell me any interest rate info until I submit my tax returns to you... I'm walking. This type of generic information should be easy for a lender to provide. Just remember such a verbal conversation is for your guidance only.

I'd love to hear anyone else's advice, and particularly if you're working in Metro Detroit if you have local or national lenders. If you're doing SFR do you use loan brokers?