Appraisal/ Refinance first or Get Renter First?

Question

Hey so my first property is completed!!! I’m in the process right now of finding a renter. My loan is through a hard money lender that I’m planning to refinance. I was wondering though, should I get a renter in first or should i get the refinance done now so the appraisal can be done in a nice empty clean house without a tenant living there? Thanks in advance!

Metodi Haralambiev · Answer

@Michael Craig as this being a non owner occupied property, if starting with refinancing first, doesn't this mean the bank will look into his personal ability to repay the loan?

I do know banks can look for what can be expected as rent, but that usually applies for established investors with track record.

Thank you

Michael Craig · Answer

@Metodi Haralambiev

Having a current renter is factored in but it does not get weighed heavily in under writing. What gets weighed heavily is claimed rental income on the last few years of tax returns.

When I wrote my post, I was assuming @Tyshawn Best will be approved to refinance without including any new rental income. If I was in his situation, I would list the rental units and try to get them rented while simultaneously refinancing.

Sean McKee · Answer

It depends on the lender sometimes. I had one request signed leases before they would close, luckily I had tenants already lined up. I would check with your lender before, unless think you can rent it before closing.

good luck and congratulations.

Mike McCarthy · Answer

@Tyshawn Best do both together. One has little to do with the other. Sure, you’ll have to coordinate a walkthrough for the appraiser with the tenant, but your bank will be happy to see some additional income too.

Michael Craig · Answer

@Tyshawn Best

Congrats on the property!

Start the refinance now - it'll take 30+ days to close (maybe even longer given COVID).

Side note, the appraisal usually happens within the second or third week of the refinance process so there is a good chance that you can have the appraisal done before tenants move in.

Josh Bakhshi · Answer

congrats.  Other than needing the rental income to help you get the refi, why would you wait?

Appraisal/ Refinance first or Get Renter First?

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