Having a problem with a Brrr Refinance

8 Replies

Hello all,

I have a small problem and was hoping to hear back from anyone that can help. I am trying to buy a triplex ( which im going to convert back to a duplex) and behind this triplex is a single family home (for 50 k cash and I am going to fix up). I checked with the bank to see if I can refinance to get some of my initial investment back and he (this bank btw works with a lot of investors refinancing) told me I cannot and it would be very difficult because this type of property does not comply with Fannie May and Freddie Mac. I believe it does not due to the SFR behind the duplex on the same lot.

He told me to look for (or google) a "portfolio Investment Property bank".   I am in northeast Ohio so I was hoping to find one within the Cleveland area or Ohio.   If not that is fine also but I am trying to see if anyone can suggest a company that would be able to refinance this style property and how much higher the interest rate would be.

I want to pull the trigger but want to make sure I can refinance this after some time with not problems.

Thanks for your feedback in advance!

Ryan

Sounds like you have a Triplex (double in front and single in back). I’ve seen conventional lenders (those selling on secondary market) fund deals like this before. Sounds like you need a new lender 

Are both properties owned by the same person? If so.... instead of buying the multi family for $100K..... see if you and the seller can come to an agreement where you buy the multi family for $150k on the premise that they will Warranty Deed (literally just sign over) the house to you.

That’s what I did in Cleveland earlier this year with literally the same type of situation. The house and the duplex “looked like” they were on the same lot but the county clearly had them as sitting on two completely different parcels.

@Ryan Kinley , I have some success with a local bank in Columbus. I closed in 45 days, a 9 pled and a 4plex together. Let me know if you would like more information.

Yes anyone that knows of a bank that can refinance this deal would be great . I suppose I could see if he would wait for me to get financing initially. 

I’m prepared to give the 50 k he is asking for both properties (triplex in front and Sfr in rear) , but want to make sure I can get the refinance later in hopes I can get most of my cash back. 

My plan is to get the triplex rented as a duplex ASAP and the slowlyvwork on the rear SFR. The Sfr needs a lot of work

Originally posted by @Matt Motil :

Sounds like you have a Triplex (double in front and single in back). I’ve seen conventional lenders (those selling on secondary market) fund deals like this before. Sounds like you need a new lender 

What is the secondary market? Higher interest loans? 

Ryan,

You may want to try First Federal of Lakewood (FFL) or LimaOneCapital. FFL is a local bank that I've worked with for years and they are very solid. FFL keeps some of their own loans in-house, i.e. as a "portfolio lender." However, I do not recommend asking if they are a "portfolio lender." That term is constantly misused on BP from an investor standpoint. Banks don't really use that term. Rather, just ask if they would be able to loan on your situation. With that, if you are looking to refinance, most banks will do is 75/25 LTV based on an objective appraisal after you've fixed it up (i.e. it's rent ready). Additionally, most banks will require a vesting/resting phase of anywhere from 6-12 months, i.e. you'll have to own the property that long before being allowed to refinance. (Note: If you know of any local NE "portfolio" banks that don't require this, I'll all ears!)

LimaOneCapital (L1C) is a national lender.  I've spoken with them on the phone and heard about them through other investors.  They literally cater to real estate investors and have many different types of loans.  With that, their interest rates and terms are generally not as good as your local lender.  L1C is otherwise filing a niche that many banks don't offer.  And by doing so, their charge a premium (in my opinion).  However, L1C may work for your situation.  I have not personally used L1C because I prefer working with my local lenders whenever possible.    

I've from NE Ohio and been investing since 2010.  I also cannot get "normal" financing anymore - like your situation - but for a different reason in that I've hit 10 loans.  So, I work with local lenders willing to lend to a borrower with 10 loans or more.  Most banks won't do this because they sell their loans on the secondary market to Fannie and Freddie which don't accept loans from guarantors with over 10 loans.  However, banks that keep certain loans in-house don't have to follow the guidelines of Freddie and Fannie.  Rather, they have their own guidelines on those.  

If you want to PM me, let me know.  

Good luck!

Rick