Looking for conventional/market rate loan for four plex in Napa.

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Looking for conventional/market rate loan for four plex in Napa.

Robert Medina
Member since 2022 · 4 posts · 2 votes

Greetings, looking for some suggestions. I'm in between projects and have a property (a four plex) in Napa, CA that doesn't have any leverage against it. Property will likely appraise for about $1.5. I completely rehabbed this property between 2018-2019, since it has been run by a PM and cash flowing positively. Looking to pull some equity fairly soon out of this property to continue another project that I have going on in NC. NOT LOOKING for hard money and the economics simply wouldn't work. Anyone have thoughts on someone that would write a note on this? Thanks in advance, RM

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Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
4y

Due to the size and nature of the deal, it doesn't look like something that would fit a conventional box. However, non-QM and especially DSCR loans sounds like would be a fit, would qualify on the cash flow and allow for up to a million cash-out (most lenders). DSCR loan rates are much closer to conventional than hard money, typically floating about 75bp premium, but with much much easier qualification (and interest-only options)

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  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    4y

    Due to the size and nature of the deal, it doesn't look like something that would fit a conventional box. However, non-QM and especially DSCR loans sounds like would be a fit, would qualify on the cash flow and allow for up to a million cash-out (most lenders). DSCR loan rates are much closer to conventional than hard money, typically floating about 75bp premium, but with much much easier qualification (and interest-only options)

    [email protected]
    Harpoon Capital514 Reviews
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  • Robert Medina
    OP
    Member since 2022 · 4 posts · 2 votes
    4y

    Thank you for the quick response, Robin. 

    I'm looking to pull about $350k for this other project, use those funds during the next two years in hopes of making the other project cash flow positive then repay this loan within five years to leverage again with a conventional loan. Hope that makes sense. There are a LOT of hard money lenders out there, definitely not looking for that. Any qualified/credible lenders that you might be familiar with or suggest? 

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  • Issac San Miguel
    Lender · Austin Texas · Member since 2022 · 319 posts · 156 votes
    4y

    Hey Robert,

    If you're only looking at a short term period I would consider a 5/1 ARM DSCR note.

    This note is based on the cashflow of the property.  With that value and leverage you would get the best rates out there,  probably in the low 7s.

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  • Erik Browning
    Lender · CO CA TX WA ID OR · Member since 2020 · 419 posts · 542 votes
    4y

    Hi @Robert Medina. Correct, hard money is not the best route to go here since the product is not designed for a cash out refi. Like the others have mentioned, both DSCR and some commercial products are best suited to what you are trying to do. You are in a great position.

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  • Yolanda Washington
    Member since 2018 · 8 posts · 2 votes
    4y

    I recently used https://tinyurl.com/LendingLoo...for a cash out loan on a property I own in the area. They were very quick with great rates. Good luck!!

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  • Josh Edwards
    Lender · Bend, OR (bend) · Member since 2019 · 17 posts · 8 votes
    4y

    Hey @Robert Medina. A DSCR loan would probably be your best bet. They're designed for this situation and as mentioned above generally have similar rates to conventional but non of the hassle of documentation. I sent you a pm with more info!

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  • Jared RineBusiness Member
    Lender · Sacramento, CA · Member since 2009 · 1k+ posts · 277 votes
    4y

    @Robert Medina..a DSCR loan sounds like it would be a perfect fit. Don't need any personal income qualifications and sounds like you have substantial equity. Rates are right in line with conventional money (fannie/freddie) and possibly even better, depending on the situation. Assuming your fico is good, it sounds like you should have no issue qualifying. I'm doing these right now (full disclosure- I'm a mortgage broker in CA) for clients not only in CA, but in other states as well.

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