Refinance Advice on Portfolio of Rental Properties

OP

Rental Property Investor · Wichita Falls, TX · Member since 2018 · 353 posts · 80 votes

2y

Quote from @Robin Simon:

Always try to run the numbers side by side with the two scenarios (as is, vs. the cash-out refi + new property) and look at the bottom line of each - typically the best way to do it.

Also - any reason why you are committed to someone "local"? There are many 30-year options for this with nationwide or even Texas regional lenders

What your interest rate on 30 years? Tons of fees? I sent you email to get a quote. 30 years doesnt make sense if 8k in fees. Take you 4 to 5 years to break even even if saving 200 a month on payment for the 30 year note.

Wyatt WolffPro Member

Lender · Charlotte, NC · Member since 2019 · 467 posts · 279 votes

2y

I would say yes, if you are planning to grow. Depending on how much debt you have, it will probably pencil out to be advantageous. But that is only half of it. Consolidating everything will 1/ allow you to better systemitize and keep track of everything and

2/ will be easier to get financing on future properties.

Hope that helps!

[email protected]

[email protected]818-269-7983

Erik EstradaBusiness Member

Lender · Member since 2022 · 6k+ posts · 1k+ votes

2y

Quote from @Nathan Frost:

Quote from @Robin Simon:

Always try to run the numbers side by side with the two scenarios (as is, vs. the cash-out refi + new property) and look at the bottom line of each - typically the best way to do it.

Also - any reason why you are committed to someone "local"? There are many 30-year options for this with nationwide or even Texas regional lenders

What your interest rate on 30 years? Tons of fees? I sent you email to get a quote. 30 years doesnt make sense if 8k in fees. Take you 4 to 5 years to break even even if saving 200 a month on payment for the 30 year note.

Hey Nathan,

Most DSCR lenders will be able to refinance you with a 30 Year fixed DSCR loan as long as the rental income covers the mortgage payment. If you have an excellent credit score, 740+, have a DSCR ratio of 1.25, and can show reserves, you may very easily achieve a rate in the 7s.

What is your ultimate goal for this loan? If you plan to keep this loan for the full length of the term and don't plan on refinancing again, it may make sense to get a 30 year fixed note. Fees may also be financed depending on the LTV

LuxePrivate Investments LLC 572 Reviews

OP

Rental Property Investor · Wichita Falls, TX · Member since 2018 · 353 posts · 80 votes

2y

Quote from @Erik Estrada:

Quote from @Nathan Frost:

Quote from @Robin Simon:

Always try to run the numbers side by side with the two scenarios (as is, vs. the cash-out refi + new property) and look at the bottom line of each - typically the best way to do it.

Also - any reason why you are committed to someone "local"? There are many 30-year options for this with nationwide or even Texas regional lenders

What your interest rate on 30 years? Tons of fees? I sent you email to get a quote. 30 years doesnt make sense if 8k in fees. Take you 4 to 5 years to break even even if saving 200 a month on payment for the 30 year note.

Hey Nathan,

Most DSCR lenders will be able to refinance you with a 30 Year fixed DSCR loan as long as the rental income covers the mortgage payment. If you have an excellent credit score, 740+, have a DSCR ratio of 1.25, and can show reserves, you may very easily achieve a rate in the 7s.

What is your ultimate goal for this loan? If you plan to keep this loan for the full length of the term and don't plan on refinancing again, it may make sense to get a 30 year fixed note. Fees may also be financed depending on the LTV

Goal is long term and to pay off some bad debt. I plan to keep all these homes for at least 20-30 years or longer.

[email protected]860-538-3672

Devin PetersonBusiness Member

Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 667 votes

2y

Quote from @Nathan Frost:

Hi all, need some advice. I am looking at doing a cash out refinance / portfolio loan for 25 years at 7.5% interest on 5 of rental properties. Be nice to get 30 years if possible but no one local does that. My payments total would go up $400-500. However, it would clear all my debt and possibly allow me to purchase another rental property to add to the portfolio. I would be eliminating bad debt and high interest credit cards that I had to use to do some repairs. Yes, my interest rates would go from 5.25 to 7.5 or 8 but I would be eliminating debt payments and possibly adding a 12th rental property? Is it wise to do this and be debt free even though my total payments on those 5 properties will go up $500? I feel like the answer is yes, especially if I can buy another rental property to add to the portfolio. Thoughts? Smart to do? Is it a no brainer?

Compare apples at the net bottom line number. I would say that there are some wholesale DSCR lenders out there that can get close to these terms. If the qualifying criteria and equity are there, you can roll in your closing costs. If you do not care about a 5 or 6 yr PPP, you can achieve a rate in the 7's

ProAlpha Capital56 Reviews

OP

Rental Property Investor · Wichita Falls, TX · Member since 2018 · 353 posts · 80 votes

2y

Quote from @Devin Peterson:

Quote from @Nathan Frost:

Hi all, need some advice. I am looking at doing a cash out refinance / portfolio loan for 25 years at 7.5% interest on 5 of rental properties. Be nice to get 30 years if possible but no one local does that. My payments total would go up $400-500. However, it would clear all my debt and possibly allow me to purchase another rental property to add to the portfolio. I would be eliminating bad debt and high interest credit cards that I had to use to do some repairs. Yes, my interest rates would go from 5.25 to 7.5 or 8 but I would be eliminating debt payments and possibly adding a 12th rental property? Is it wise to do this and be debt free even though my total payments on those 5 properties will go up $500? I feel like the answer is yes, especially if I can buy another rental property to add to the portfolio. Thoughts? Smart to do? Is it a no brainer?

Compare apples at the net bottom line number. I would say that there are some wholesale DSCR lenders out there that can get close to these terms. If the qualifying criteria and equity are there, you can roll in your closing costs. If you do not care about a 5 or 6 yr PPP, you can achieve a rate in the 7's

Juat sent email would love to see the options / quote?

Nick BelskyBusiness Member

Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes

2y

@Nathan Frost

Many of your properties are falling below the $100k value threshold. Many lenders will immediately pass on it due to that alone. Cash flows are solid on all save one, but still good enough. The value is the largest hurdle you are facing.

Pulling the cash out to payoff debts is sound and if you can free up enough cash to purchase another cash flowing property, you are all win-win. Keep in mind, your tenants are paying interest and covering your loan payments not you.

Cheers!

[email protected]

Belsky Mortgage, LLC522 Reviews

OP

Rental Property Investor · Wichita Falls, TX · Member since 2018 · 353 posts · 80 votes

2y

Quote from @Nick Belsky:

@Nathan Frost

Many of your properties are falling below the $100k value threshold. Many lenders will immediately pass on it due to that alone. Cash flows are solid on all save one, but still good enough. The value is the largest hurdle you are facing.

Pulling the cash out to payoff debts is sound and if you can free up enough cash to purchase another cash flowing property, you are all win-win. Keep in mind, your tenants are paying interest and covering your loan payments not you.

Cheers!

Get it just the repairs / debts have added up. If I clear the debts it opens the door for more lending and should equal out payments wise.

Dave Skow

Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes

2y

@Nathan Frost- thanks .if you ae able to get one loan that covers 5 rentals at a 7.5% rate - this is a good deal ( assuming loan fees arent too high ) ..shifting debt is a good move

Alex Hunt

Lender · Member since 2022 · 441 posts · 134 votes

2y

Yes I agree, no brainer if eliminating credit card or other high interest debt. Which is very common to see from investors who do repair out of pocket. Congrats on growing to the point you have that's great!

Local isn't always the best, would be happy to connect on the refinance, the purchase and any fix n flips as well.

Chad Davis

Lender · Richmond VA · Member since 2012 · 311 posts · 33 votes

2y

@Nathan Frost What was the outcome on this?

OP

Rental Property Investor · Wichita Falls, TX · Member since 2018 · 353 posts · 80 votes

2y

Quote from @Chad Davis:

@Nathan Frost What was the outcome on this?

Refinanced

1 Reply

Noah Dreizer

Member since 2022 · 5 posts · 1 vote

2y

Quote from @Nathan Frost:

Quote from @Chad Davis:

@Nathan Frost What was the outcome on this?

Refinanced

Who'd you use? And how much did you pull out?

1 Reply