Multifamily refinancing loan

8 Replies

I currently have 2 rental units but am looking at buying my first multifamily property in my hometown here in NC. It is a 2/1, 2/1, and studio triplex. I am going to be using an equity loan for 1yr intrest only to purchase the property. I talked to several lenders today to see what their seasoning period and LTV percentage allowed to cash out after remodeling it is. The problem im having is that all the lenders said they will have to have 3 comps of triplexes to get an appraisal to refinance to a 30yr fixed and without comps no loan. There are plenty of duplexes around but hardly any triplexes. Any ideas how to solve this dilemma? I dont want to do a brrrr on this property and be stuck without being able to refinance it.

I haven't heard of a bank unwilling to do a loan because their weren't nearby comparables. Maybe that's more of an issue with rural properties. Has the bank said they won't do the loan because of this or are you assuming it will be a problem? I would ask the bank. I would I think the appraiser could use a duplex as a comp or find ones a little bit further out or something along those lines.

They just said if the underwriters couldn't find triplex comps in the area, they would be unable to do the loan. Two lenders told me the same thing today

@josh taylor

We had a borrower with a similar situation in Middleburg VA. There were no 4 unit comps on a beautifully renovated 4 unit building in a very desirable area. The appraiser couldn't even find any 2 unit comps. Lender after lender have turned it down and finally, I believe the borrower is going to sell.

It does happen

Stephanie

A bank must have an appraisal to underwrite a mortgage.

An appraiser must find comparables to prepare an appraisal.

No comparables = no appraisal = no mortgage.

Since posting this, I have found a mortgage broker who said they can use duplexes and quadplexes to compare the triplex im purchasing. She seemed to think it would be no problem to get a mortgage on. We will see

@Josh Taylor I would be wary, I’m a mortgage broker and I don’t think I would personally tell you yes to that. It is truly up to the lender they use and if the appraiser clearly has problems locating something to compare it to then any lender is going to question that as well.

Just food for thought.

Hey Josh,

It is really going to be up to the appriaser and if they think they can do it. Appraisals are completely subjective. You can get 2 different appraisers to appraise the same property and you will end up getting 2 different values. Some Appraisers will consider using the duplexs as comps and adjust pricing for the 3rd untit. Or like somebody mentioned above, they will use duplexes and 4-plexes and adjust the pricing accordingly. Other appraisers will just decline it. it is also going to depend on how the property is set up. Is it truely a 3 unit property or is it a duplex with a detached garage that was converted into a studio apartment. I would say it is not a dead deal for you, you just need to investigate a little more. 

Hope this helps!