Refinancing properties
Heys guys, quick question. is their a limit to the amount of multifamily properties you can refinance with the bank?
Say you get a private lender for 100k then you buy a duplex for 75k (hypothetically) and put 25k into it and it appraises to 155k. You can now refinance up to 70% with the bank and pay back your private lender the 100k (plus interest). Then you keep the cash flowing property using the tenants to pay the refinanced loan with the bank.
- My question is this, is there a certain number of properties you can refinance with the bank? like if the deals are all working could you do this strategy forever or eventually will the bank not allow you to refinance anymore properties ?
Thanks for any help!
Depends - banks generally have exposure caps, whereas privates are more lenient. As an investor, it's better to have a diversified pool of capital partners in case you've hit your limits and need to get out of dicey situations but be mindful of minimum earn/break fees.
Is it possible to find smaller local banks that don't have limits on number of properties refinanced ?
They cap limits i.e. total capital committed to the loans, not so much the number of properties being financed. It's hard to comment on specific caps as they vary from bank to bank and increase/decrease subject to changes in the borrower's creditworthiness and macro environment.
what would be an example of total capital committed to a loan I refinance into?
I have to put down 75% of loan or higher for each refinanced loan ? assuming I have perfect credit and macro environment is stable.
Brrr king
ps. better pockets is okay but codie sanchez is not
The bank may look at how long you've owned the property. If your cost basis is $100k, the bank may not give you a 100% LTC mortgage on it if you've only owned it a year or two. At that loan amount the bank may care more about your creditworthiness, but in my experience they don't like completely cashing out Borrowers after only a short hold period.
As others have mentioned, there is usually a cap on how much the bank will lend to the same individual/entity at any given time. The regional banks that I use generally have limits of $20-30mm at any given point. If you have a really good relationship with the bank then they may make exceptions for you to exceed this, but it won't be unlimited, maybe $35mm-40mm. Luckily, there are many banks out there, especially regional/local banks which are the banks that would typically lend on these types of projects.
Can you get multiple loans from different banks at a time once you max out one at the 25mm - 30mm limit ? or will the other banks see the loans you have with previous banks and not allow it ?
Thanks for the response this is very helpful!
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