Refinancing out of hard money options w/o W2

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Refinancing out of hard money options w/o W2

Kerry Krienitz
Member since 2022 路 3 posts 路 1 vote

I was hoping someone can help me understand the process of BRRRing using a hard money lender for acquisition and then refinancing after renovation and renting.  If I do not have a W2, am I still able to refinance into a longer term mortgage after I season the property?  Or am I still not qualified w/o a W2?  I've read through the forums but read conflicting comments 馃槵 help would be greatly appreciated! 

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Robin SimonBusiness Member
Lender 路 Austin, TX 路 Member since 2022 路 5k+ posts 路 4k+ votes
3y

You are describing the perfect example of a situation needing a "DSCR" Loan - made exactly for this situation, meant for turnkey (fully renovated and rented) properties and qualification based on the property, not the income (no DTI, no income verification needed). Bonus points for DSCR lenders that are super comfortable with BRRRR that also do hard money loans for rehabs (the B)

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  • Robin SimonBusiness Member
    Lender 路 Austin, TX 路 Member since 2022 路 5k+ posts 路 4k+ votes
    3y

    You are describing the perfect example of a situation needing a "DSCR" Loan - made exactly for this situation, meant for turnkey (fully renovated and rented) properties and qualification based on the property, not the income (no DTI, no income verification needed). Bonus points for DSCR lenders that are super comfortable with BRRRR that also do hard money loans for rehabs (the B)

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    Harpoon Capital515 Reviews
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    7Reply
  • Erik EstradaBusiness Member
    Lender 路 Member since 2022 路 6k+ posts 路 1k+ votes
    3y
    Quote from @Kerry Krienitz:

    I was hoping someone can help me understand the process of BRRRing using a hard money lender for acquisition and then refinancing after renovation and renting.  If I do not have a W2, am I still able to refinance into a longer term mortgage after I season the property?  Or am I still not qualified w/o a W2?  I've read through the forums but read conflicting comments 馃槵 help would be greatly appreciated! 


    Yes a DSCR loan could work in this situation depending on if the property debt services. There are NO DSCR options as well if you do not qualify because of low market rents.

    [email protected]818-269-7983
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    0Reply
  • Erik EstradaBusiness Member
    Lender 路 Member since 2022 路 6k+ posts 路 1k+ votes
    3y
    Quote from @Erik Estrada:
    Quote from @Kerry Krienitz:

    I was hoping someone can help me understand the process of BRRRing using a hard money lender for acquisition and then refinancing after renovation and renting.  If I do not have a W2, am I still able to refinance into a longer term mortgage after I season the property?  Or am I still not qualified w/o a W2?  I've read through the forums but read conflicting comments 馃槵 help would be greatly appreciated! 


    Yes a DSCR loan could work in this situation depending on if the property debt services. There are NO DSCR options as well if you do not qualify because of low market rents.

     And options with shorter prepayment penalties. Most of these loans have 3-5 year prepays and rates are floating in the mid 8s for the time being. 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 570 Reviews
    WebsiteView Page
    0Reply
  • Eliott Elias
    Investor 路 Austin, TX 路 Member since 2021 路 9k+ posts 路 5k+ votes
    3y

    You would use DSCR lending

    0Reply
  • Issac San Miguel
    Lender 路 Austin Texas 路 Member since 2022 路 319 posts 路 156 votes
    3y

    Low/No Doc DSCR - depending on the situation/leverage you are looking at base rate in the 7s.

    0Reply
  • Jon Puente
    Lender 路 Charlotte, NC 路 Member since 2020 路 224 posts 路 221 votes
    3y

    Hey Kerry, 

    This is a great question. You would need a "Non QM" loan, if you are not using W2 income to qualify. The main two options you have are DSCR (the best choice) or Bank Statement Loan (2nd best if you are self employed and have some type of income).

    As long as your rent covers the payment in a 1 to 1 ratio and you have good credit, you are good! 

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  • Kerry Krienitz
    OP
    Member since 2022 路 3 posts 路 1 vote
    3y

    @jonpuente thanks for the response! Can you clarify whether dscr loans always require seasoning or do some base their decision on potential market rents ?  Or is that simply lender dependent? 

    0Reply
  • Ryne Sweeney
    Lender 路 CA 路 Member since 2022 路 16 posts 路 5 votes
    3y
    Quote from @Kerry Krienitz:

    @jonpuente thanks for the response! Can you clarify whether dscr loans always require seasoning or do some base their decision on potential market rents ?  Or is that simply lender dependent? 


    You can do a rate and term refi with no seasoning as long as there is a tangible benefit i.e. lower payment, no balloon payment, or lower rate...

    If you pull cash out then lenders require 6 months seasoning.

    You will have a lower LTV limit if the property is unrented as well. Keep that in mind. For reference a 80% LTV DSCR refinance could start in the 9%+ range.

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  • Dylan M. Davis
    Lender 路 NJ 路 Member since 2022 路 129 posts 路 18 votes
    3y

    Hey there, most lenders are only offering competitive DSCR products for 1-4 unit properties. 5+ is difficult nowadays. You acquire a property and fix it up, at 6 months you refinance with a lender that can do it at 75% LTV cash-out or you can do a rate/term at any time leased/unleased.

    0Reply
  • Chris MasonPro Member
    Moderator
    Lender 路 CA 路 Member since 2015 路 9k+ posts 路 10k+ votes
    3y
    Quote from @Kerry Krienitz:

    I was hoping someone can help me understand the process of BRRRing using a hard money lender for acquisition and then refinancing after renovation and renting.  If I do not have a W2, am I still able to refinance into a longer term mortgage after I season the property?  Or am I still not qualified w/o a W2?  I've read through the forums but read conflicting comments 馃槵 help would be greatly appreciated! 

     Point of clarity. There is no requirement to get a normal mortgage that you are issued IRS Form W-2 on an annual basis. Self employed people get mortgages all the time (Realtors, for example). You need stable qualifying recurring income. That can be a W-2 job, it could also be an annuity, a business you run, you could be a 1099 independent contractor, you could be a trust fund baby, and so on. 

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