Riverside is one of the few Southern California markets where the buy, renovate, rent and refinance plan still works on small multi-unit buildings. The refinance at the end is a rate-and-term DSCR loan, and it is where the plan either locks in or falls apart.
In short: LendingStreet refinances Riverside-area rentals of 1 to 8 units out of hard money, bridge or existing loans into long-term DSCR loans, up to 80% LTV on some rate-and-term programs. The loan qualifies on the property's rent with a 1.0x standard minimum DSCR, a 620 minimum credit score and no W-2s or tax returns, and 30-year terms are available. The usual goal is a lower, predictable payment and no looming maturity date.
Riverside investors typically come to us in one of three situations. They finished a renovation with a hard money or fix and flip loan and leased the property. They bought with a bridge loan and completed lease-up. Or they have an older adjustable-rate or private loan with a reset or balloon date coming.
In each case the new DSCR loan pays off the existing debt and closing costs, with little or no cash to the borrower. Because no equity is being taken out, some programs allow up to 80% LTV, higher than the 75% cash-out limit, and seasoning is usually simpler.
This example is illustrative and not a quote. An investor bought a triplex in the Eastside neighborhood for $640,000 with a hard money loan, spent $90,000 on renovations, and now owes $690,000. The building appraises at $900,000, and all three units lease for $2,050 each, $6,150 in total. Taxes based on the purchase price and insurance are about $847 a month.
The hard money payment, interest-only, runs about $6,325 plus taxes and insurance. A rate-and-term DSCR refinance of the same balance, about 77% of value, carries an estimated principal and interest payment of $4,591, for a ratio of about 1.13x. The monthly payment falls, the maturity risk disappears, and the loan amortizes.
| Item | Hard money loan today | DSCR rate-and-term refinance |
|---|---|---|
| Balance | $690,000 | $690,000 |
| Structure | Short-term, interest-only, near maturity | 30-year, amortizing |
| Principal and interest (estimated) | $6,325 | $4,591 |
| Taxes and insurance | $847 | $847 |
| Total monthly payment | $7,172 | $5,437 |
| LTV on $900,000 value | 77% | 77% |
| DSCR at $6,150 rent | 0.86x | 1.13x |
The appraiser will value the property in its finished condition, so make sure the work is finished and documented. Permits closed out with the City of Riverside's building and safety division, or the county for unincorporated areas, support value and avoid questions from title and insurance. Before-and-after photos, the final budget and contractor invoices help the appraiser understand what changed.
A garage conversion or added unit without permits can lower the value and may not count toward rent. Legalize it before you refinance if you can.
A refinance does not trigger Prop 13 reassessment. However, the county can add the value of new construction, such as an addition or a new unit, to your assessed value. Cosmetic repairs and like-for-like replacements generally are not new construction. If you added square footage or an ADU, expect a supplemental assessment and use the higher figure in your numbers.
California's Tenant Protection Act caps annual increases on covered units and requires just cause for most evictions after a year. A unit you leased after the renovation starts at the rent you set, so price it at market with good comparable listings. The refinance qualifies on those signed leases.
Start 60 to 90 days before your short-term loan matures. Appraisals, title and insurance can take longer in busy seasons, and insurance placement in fire-prone parts of the county can add time. If you are close to maturity, ask your current lender in writing about an extension before you begin.
Lease all units before you apply if you can. Vacant units lower the qualifying rent, and some programs limit how much market rent can be used for a vacant unit.
Many Riverside investors also check rents on similar renovated units before ordering the appraisal. If your leases are below the market, renewing at a higher rent first can raise the ratio and make the refinance smoother.
If you want money back out of the property, the refinance becomes a cash-out, with a 75% LTV ceiling and stricter seasoning on recent purchases. Many Riverside BRRRR investors do a rate-and-term refinance first to retire the short-term loan, then a cash-out later once the property has seasoned and rents have grown.
If you hold five or more rentals, a blanket portfolio loan can refinance them together with one closing and one payment.
The same path works for a property bought with a bridge loan. Once the vacant units are leased and the make-ready work is done, the refinance qualifies on the new leases. In Riverside, stabilized duplexes, triplexes and fourplexes often support a long-term loan at or near the bridge balance, which keeps the exit simple.
If the appraisal comes in lower than you expected, you have options: bring a modest paydown, choose a sub-1.0 DSCR program, or wait for a lease renewal at a higher rent. We will show you each path with real numbers before you decide.
Replacing an older adjustable-rate or private loan follows the same logic. The goal is a fixed, amortizing payment and no balloon date hanging over the property.
Send the address, payoff amount and maturity date, current leases and your estimate of value through the form below, or call (877) 298-1001. We will show you the payment and ratio before you order the appraisal. See our California rate-and-term page for statewide terms.
A refinance that pays off existing debt and closing costs with a long-term DSCR loan, without taking meaningful cash out. It qualifies on the property's rent.
Yes. That is the most common use. The new loan is sized on the appraised value and the signed leases.
Up to 80% LTV on some rate-and-term programs, subject to the DSCR test. Larger balances and 5-8 unit buildings may have lower limits; it varies by program.
It helps. Vacant units lower qualifying rent, and programs vary in how they treat them.
Not because of the refinance. Additions or new units can be assessed as new construction.
That would be a cash-out refinance with a 75% LTV ceiling and its own seasoning rules.
Plan for several weeks, and start 60 to 90 days before your current loan matures.
Yes. LLC borrowers are standard, and you sign for the loan personally.
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