Experience with RenoFI?

[Max Fefer]

Hi all,

New to the BiggerPockets community here! I am looking at potentially building an ADU on my property. While I was exploring HELOCs, cash-out refinance, private lending, hard money loans, etc., RenoFi came up as an option. It's an interesting option for HELOCs and cash-out refinancing for building an ADU where their lending partners consider the future loan-to-value (LTV) of the property after building the ADU. Does anyone have experience with RenoFi? Being able to use the future value after property improvements is appealing.

https://www.renofi.com/

[Kevin Romines]

Renofi is not the actual lender, they are basically a broker, which is not a bad thing so long as they have a program that can work for you. You are correct that a typical HELOC or other loan, will not take into account the ARV or after repair value. They will only go on what value is today. So if they have a program that will consider ARV and you need the additional value to get the loan needed, then yes, that is good program to consider.

You also need to consider what your exit from that loan might look like. Meaning, do you want a higher interest rate 2nd hanging around for years to come, if so, no worries. If not, you will need to do a cash out refinance to consolidate your existing 1st and 2nd into a new lower first mortgage. Timing of doing that cash out refinance will be important to you to get the best rates at that time. So with current economic conditions (rates are elevated and going higher) you may need to wait for 1-3 years to catch rates at a better point. So something to be prepared for. 

I hope this helps?