Investor · New York City, NY · Member since 2017 · 118 posts · 34 votes
Hi Guys. I am finishing a three-apartment unit renovation, and I am starting to look for a lender to refinance it long-term. Any suggestions for companies you had a good experience with? Can be brokers, banks, etc.? Are there any lenders charging less than 7%? I would appreciate any help and guidance on this.
Carlos, congrats on getting to the finish line! A few things will move your rate more than which lender you pick:
Get it leased before the appraisal. Empty units only count at about 100% of market rent on a refi and not your lease
Decide rate and term or cash out before you shop. Cash out usually means 75% instead of 80% and a little more rate
720+ gets the best pricing
If you’re holding long term, a longer prepay usually buys you a lower rate
Most programs want you on title about 3 months before they’ll lend off the new value. Get every quote with rate, points and prepay together so you’re comparing the same thing.
I run a lender, so weigh that. Also, im partial to DSCR
@Carlos Pelegrina congrats on getting to the finish line. On a 3-unit BRRRR refi, a few things will matter more than the rate:
Seasoning. How long have you owned it? Some lenders will only lend off your purchase + rehab cost until you hit 6-12 months. Others will cash out on today's appraised value with no seasoning. If you're refinancing in the next few months, that one question can be worth a lot of cash-out.
Rents. On a DSCR loan the property qualifies, not you. Many lenders use the lower of your signed leases or the appraiser's market rent, so get the units leased at market before the appraisal if you can.
Prepay. The lowest rate usually comes with the longest prepayment penalty. If you might sell or refi again in 2-3 years, a slightly higher rate with a shorter prepay can be the better deal.
Conventional vs DSCR. If your income and DTI are strong, conventional on a 3-unit can price well, but it's full documentation and caps how many financed properties you can hold. DSCR is easier to scale and can close in your LLC.
Ask every lender you talk to those same questions and compare the structure, not just the rate.
Disclosure: I'm a DSCR/hard money broker (DSCR Kings, NMLS #2016766). Happy to run the numbers if you want a second set of eyes.
I work with Capova Capital. They offer DSCR financing for investment properties, including refinances. Definitely worth reaching out to see what they can offer on a three-unit property. I'd ask them about their current rates, closing costs, and refinance terms to see if they can get you below 7%.
Hi Carlos, congrats on getting close on the 3-unit. For the long-term refi, the two main paths are a conventional rate-and-term or cash-out refi (if it's in your personal name, and watch the seasoning rules) or a DSCR loan that qualifies on the property's rent instead of your personal income, which also works in an LLC. Which one prices better depends on your credit, LTV, how long you've owned it, and whether the units are leased up.
Having signed leases and a clean summary of the renovation scope and costs ready will help the appraisal a lot.
Happy to walk through your options on a quick call, my direct line and email are on my profile.
Hey @Carlos Pelegrina , congrats on getting it to the finish line. On a 3-unit, sub-7% usually means a bank, not a DSCR lender: if your personal income documents well, ask two or three local banks or credit unions in the Hudson Valley about a portfolio loan on the building, and also check a conventional 2-4 unit loan if you're under the 10-financed-property limit.
DSCR is the fast, no-tax-return option, but you'll pay more rate for it. Get it fully leased before the appraisal, decide cash-out vs rate-and-term, and get every quote with rate, points, prepay and fees on one page. Best of Luck!