Rehab, Rent, Refinance... What to bring to the banks when refinancing?

7 Replies

Hello everyone,

I am looking to start approaching banks that do portfolio lending to refinance out of a few rehab and rents.  I have purchased these properties using hard money lenders and have owned one of the properties for 5 months and the other for 4 months. One is fully rehabbed and rented out since May and the other will be finished the end of the month.  I plan on putting together a booklet that describes my business, my approach to investing along with the property details.  I plan to set the booklet up as follows:

- Cover page

- Cover letter

- Personal credit report

- Personal references (other investors who referred me to these banks whom I have known for a few years)

- Property details including the numbers, before and after pictures and the signed leases

Is there anything else that is of importance that I should add to this?  I currently own two other mortgaged properties... should I show these as well?  I have two additional properties that I plan to rehab, rent and refinance closing at the end of the month.... should I bring these ones up too to show that I plan on bringing more business their way?

Thanks for the help!

Mike

P&L and Balance Sheet if you are using accounting software. They may ask for a "schedule of real estate owned", which is basically a P&L.

Paid property tax receipts

Warranty Deeds

Leases

Last two or three years of tax returns

Forms W-2

Last two months worth of pay stubs

Current bank statements

Copy of driver's license and Social Security card

Business plan if you have one

I would also keep a .pdf file of these documents so you can simply e-mail a copy to them.

You want to definitely bring info about the other properties you own. Portfolio lenders will almost always look to lend to those with experience. Your plan of action sounds solid and well thought out. Best of luck!

@Mike Curadossi  

Are you planning on cashing out or just refinancing? If you obtained a private mortgage and want to cash out on the property you have to wait until you reach 6 months from closing to cash out on the properties........ At least from a conventional stand point.

How many properties do you own already that are mortgaged? If you have more than 4 mortgages you won't be able to cash out, but you can refinance the private loan at any point...... And maybe increase the private loan to what you were hoping to cash out on, if you have more than four mortgages?

@Jerry Padilla

I plan on cashing out.  I obtained the hard money lending at 70% of the after repair value and then use my own money to rehab the properties.  The plan is to start the refinancing process at month 5 and then close on the new mortgage at month 6.  I currently have 2 mortgages and two properties to refinance with two more under contract.   I plan on finding a local portfolio lenders so I can avoid the limit on mortgages through banks that sell their loans off to Fanny ad Freddie. 

Would it be easier to put a second mortgage on the property for the rehab that I put into it and then do a rate and term (I think thats what its called) refinance instead of a cash out?  I have been using money from my parents home equity line to rehab the homes so I could have them file a second mortgage?

Thanks for your help!

Mike

@Mike Curadossi

You can go ten loans without a problem. All mortgages in your personal name, done through portfolio and in an LLC tied to your name, count towards the ten. After you reach mortgage number five it will be difficult to cash out. However you can rate and term refinance. If you originally have a mortgage including a private mortgage, you will not meet the delayed financing guidelines. Here is some info on both. Hopefully this helps.

http://www.biggerpockets.com/blogs/5110/blog_posts/42766-all-about-conventional-cashing-out-on-those-properties-1-10

http://www.biggerpockets.com/blogs/5110/blog_posts/42824-all-about-delayed-financing

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here