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Avoiding the Top Refinance Mistakes in Multifamily Investing

Multifamily Investments
October 27, 2025•1 min read

Even great operators stumble when refinancing because they underestimate the process.

Here are the most costly and most avoidable mistakes multifamily owners can make.

1. Waiting Too Long to Start the Refinance

This is #1 for a reason. Owners should start 12–24 months before loan maturity.

This gives them time to:

  • Fix occupancy dips

  • Improve DSCR

  • Clean up financials

  • Shop lenders strategically

Last-minute refinances force you into bad terms.

2. Incomplete or Disorganized Documentation

Lenders need a clean package that includes:

  • T-12

  • Current rent roll

  • CapEx schedule

  • Market comps

  • Financial statements

Submitting an incomplete package slows the process and can even kill a deal.

3. Ignoring Prepayment Penalties

Yield maintenance and defeasance penalties can wipe out the economic benefit of a refinance.

Always model:

  • Cost of exiting the current loan

  • Cost/benefit over the remaining term

  • Market rent and NOI growth over the next 12–24 months

You may find that the best move is to delay the refinance until the numbers align.

4. DIY Lending in a Tight Market

Going direct to a lender can work but in 2025’s market, a capital advisor may unlock better:

  • Leverage

  • Rates

  • LTV

  • Structure

  • Execution speed

You’re not just shopping rates, you’re shopping relationships and underwriting philosophies.

5. Not Stress-Testing the Deal

Lenders will and you should too.

Model your DSCR under:

  • A 1% rate increase

  • A 5–10% expense increase

  • Occupancy drops to 90%

Be the most prepared person in the conversation.

Helpful Link

HUD Multifamily Loan Handbook → https://www.hud.gov

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