Need Income-Based Lender for Triplex Refinance
My partner and I bought a triplex earlier this year in central VA on a bridge loan. We put a small amount of rehab into it to make it completely rent ready, and our all-in payoff is around 318k. During my initial deal analysis, non-renovated SFH comps sold for 405k and above, with smaller, more as-is MFHs in the low to mid 300k range further away from the house. Obviously, SFH and MFH comps are weighed differently for an appraisal, which we are finding out the hard way. We've been in the DSCR refinance process over the past month and a half trying to refi into a long-term 75-80% LTV loan unsuccessfully. We've had two appraisals done during our refinance process that came in too low (one that we've challenged to no avail). This would mean bringing a lot of money to the closing table to cover the difference, which we would like to avoid. Our property manager is about to rent each unit out for $1295, $895, $895 for a total of $3,085/mo income.
The house is in a great area, strong rental market, and we really want to keep it long term. We could shoot to just resell it and cut our losses, but want to avoid that if possible.
My question is, and it may be a long shot, are there any DSCR or private lenders that could refinance our current bridge loan payoff purely based off of rental income? Monthly PITI payment with management fee, capex, vacancy, etc. would be around $2700, so a little under $400 in cash flow with $3085 coming in.
Thanks in advance for any experiences, intel, or resources you can provide.
Most Popular Reply
#2 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Lender
- MD
It sounds like the biggest hurdle isn't the DSCR calculation, it's the appraised value. Even if the property cash flows well, most DSCR lenders still rely on the appraisal to determine the maximum LTV, so a strong rent roll alone usually isn't enough to overcome a lower valuation.
If you haven't already, I'd compare a few different refinance structures instead of focusing only on DSCR. Depending on the lender and your overall profile, it may be worth looking at portfolio products or other investment loan options if your goal is simply to get out of the bridge loan without bringing a large amount of cash to closing.
At this point, I'd be comparing the long-term cost of waiting for additional rental history or appreciation versus bringing cash in now, because either approach could make sense depending on your investment timeline.