Private Money Lender & Multifamily Refinancing (Questions)

8 Replies

Let's say you use a private money lender, so you pay cash for a multifamily property and the rehab costs. Is it more difficult to cash-out refinance after you raise the value of the home compared to an HML or traditional loan?

I understand multifamily's value is appraised NOI/CAP=ARV compared to how "nice" a single-family home is correlated to its comps. Besides how the property is appraised, what are the differences between qualifying for multifamily refinance compared to a single-family refinance?

@Mike Dusenka what size property are you talking about? If it’s less than $1M you will likely use a local community bank for financing. Commercial loans are easier to deal with versus residential but you are still dealing with a bank. Using hard money lenders might be a bit more straightforward but it all depends on who you work with.

Originally posted by @Danny Randazzo :

@Mike Dusenka what size property are you talking about? If it’s less than $1M you will likely use a local community bank for financing. Commercial loans are easier to deal with versus residential but you are still dealing with a bank. Using hard money lenders might be a bit more straightforward but it all depends on who you work with.

Hey @Danny Randazzo

Thanks for the reply.

It's less than $1M, but ARV is over $1M. Are you saying it is challenging to get Private Money lender loans for under $1M?

I'm wondering when I get a Private Money loan what the difficulties in refinancing with a bank/credit union compared to an HML to refinance with bank/credit union? Or is it a similar process? Just want to know the Pros and Cons of a Private Money loan when I refinance.

I'm wondering when I get a Private Money loan what the difficulties in refinancing with a bank/credit union compared to an HML to refinance with bank/credit union? Or is it a similar process? Just want to know the Pros and Cons of a Private Money loan when I refinance.

@Mike Dusenka I think you can do it without too much hassle but you should call a few local banks that you plan to refi through and see what their bankers tells you about the process. Some banks have seasoning periods before they refi. If you call 20+ banks you should find one that will work with your vision/goals.

Originally posted by @Danny Randazzo :

@Mike Dusenka I think you can do it without too much hassle but you should call a few local banks that you plan to refi through and see what their bankers tells you about the process. Some banks have seasoning periods before they refi. If you call 20+ banks you should find one that will work with your vision/goals.

I'll do that! Thank you. 

Originally posted by @Mike Dusenka :

Let's say you use a private money lender, so you pay cash for a multifamily property and the rehab costs. Is it more difficult to cash-out refinance after you raise the value of the home compared to an HML or traditional loan?

I understand multifamily's value is appraised NOI/CAP=ARV compared to how "nice" a single-family home is correlated to its comps. Besides how the property is appraised, what are the differences between qualifying for multifamily refinance compared to a single-family refinance?

You should always try the local bank route and then conventional financing, but after both of those let you down for one reason or another, portfolio lending will be able to close your loan.

Stephanie

@Mike Dusenka I think you can get a private money loan (PML). I'd suggest you talk to someone local and see what their requirements are to get a PML. Since ARV is around $1M you should also talk to local banks about their appetite to refi your deal if you close on it with a PML. Having a strong relationship with a local commercial banker will help you get your refi done, if you want to do that.