Alternative Refi Options?

6 Replies

Hello!

My husband and I own 3 multi family properties. We found an amazing deal nearby that we want to BRRRR. We have the cash to purchase and rehab. However, my husband just took a part-time job as we're making the transition to living off rental income and him spending more time with our kids. I reached out to our lender and he says due to our lower income and DTI based on 3 mortgages, we couldn't get approved for the refi with him. Who do you go to if traditional lenders aren't willing? I'm afraid this deal is going to be snatched up, but don't want to jump on the deal without a way to refi at the end. Thanks!

Look into a DSCR loan, they don't look at personal income, just rental income. Interest rate is higher, but it may solve your problem.

@Kaybreh Mathis

You could go through a Hard Money Lender and get a bridge loan in which you finance the whole project 80%-90% of the purchase price and 100% of the rehab. Bridge loans are typically 6-12 month interest only payment loans and are meant to be cash-out refinanced afterwards. Once the property is completed you can take out a 30 year mortgage with the same HML and use the money from the cash-out refi to pay the bridge Loan off.

The other option is you can fund the whole project yourself with cash then once finished put a 30 year mortgage on it and take out 70%-80% LTV with a HML. The rates for a HML are higher than traditional bank financing, but not to high to where it's not worth using.

Feel free to contact me, I have some HMLs I have worked with and depending on the state your in they are worth checking out.

GOOD LUCK

I would not suggest getting a hard money short term one year loan for a property you intend to hold long term It sounds like your husband's income is not going to increase in a year, after a year then refinance to a high cost loan thus maybe the property loses money. Debt service ratio loan might work where rents carry the property all by itself with a 30 year fixed loan. You need sizeable down payment to make the property cash flow and have a small ratio of profit. What are the rents vs principle interest taxes and insurance?  Take those costs vs rents to get to where it cash flows... 

@Jesse Rivera has suggested. They only best option is to do a DSCR loan. This is a Non-QM loan that only some lenders will have the product available and also have experience doing. It uses the rents of the subject property. So long as the rent is equal to or up to 15% higher than the proposed PITI mortgage payment, then you are good to go. No employment or income is put on the application. The rest is based on your credit score which will dictate the highest LOT or Loan to Value, and those two things dictate the interest rate.

I hope this helps? 

It's worth noting that interest rates are super-low right now; about 0.5% for a high-yield savings and not much better in the bond market.

Older Americans with cash in the bank who are leery of investing in the stock market at their age may perk up at the chance to invest with you by "being the bank" on a 20 or 30 year mortgage at ~4% compounding interest paid monthly.

It's worth pitching the idea to people in your network and if someone bites, have an attorney and/or title company draft up the documents giving them a lien on your property.