Transaction Details

MBP was engaged for the fourth time by a repeat client to assist with the refinance of a recently improved property. The sponsors had acquired a single-family home situated on a large lot and added two substantial ADU units in the rear. Unlike typical ADUs, these were multi story structures with generous square footage. Given the significant value increase, the sponsors sought a lender comfortable with a sizable cash-out refinance without requiring a depository relationship as they intended to use the equity to fund their next acquisition.

Leveraging our lender network, MBP sourced a capital provider who was comfortable with both the high leverage and cash out proceeds. Our team also negotiated a reduction in the prepayment penalty structure from a five-year step down to three years.

As with several of their prior projects, we encountered an appraisal challenge when the initial valuation came in lower than anticipated. Because this property represented a new product type in the area most neighboring homes lacked the added ADU units the appraiser had limited comparable data. MBP worked closely with the appraiser to justify adjustments related to finishes, building quality, price per square foot, and the enhanced income potential from the additional units. After multiple rounds of review and rebuttal, MBP successfully achieved the target valuation, enabling a DSCR above 1.0 and providing the client with the full cash out proceeds required for their next investment.