BiggerPockets

You dont have to wait at all.

You have equity in the house and the banks will allow you to borrow on that equity. This of course depends upon your provable income and credit rating.

I purchased a 3/1 for 1376.00 all cash and one month later took out an HELOC on that property so that I could make those extensive repairs that were needed.

So the answer really depends upon you and your abilities credit wise.

Also upon if it is you or your business and if the bank classifies it as an investment property which could cause a higher rate for you.

For some reason I thought you had to wait a long while. I got an email from a friend of mine yesterday, he told me he got a loan from a local bank (which is damn near impossible to do these days) on a property a month after he purchased it! Given the current lending status, this surprised the hell out of me!

Most banks that are going to sell off the mortgage (fannie/freddie) will refinance you immediately but only for 70-80% of the original purchase price regardless of improvements/appraisals. If you want more than this then expect to wait 6-12 months. Best bet is with a local bank that will keep it in house - then the rules are far more flexible. This is all based on my experience of trying it several different ways over the last 18 months but the rules change weekly so call around and see what the story is this week.

Thanks for the response, I purchased house for 110K, putting in 35K, worth 210K on a bad day. Are you saying that bank will lend me 145K on house to cover my purchase and rehab costs?

They would use the $145K (or an appraisal, if that's lower) as the value and then lend you 75% or whatever LTV they use. If their LTV is 75%, they would loan you $108,750.

After one year, FDIC insured banks will use a new appraisal, so they would loan you (say) 75% of the $210K or $157,500. Assume "a bad day" is what you'll get.

With some searching, you should be able to find a lender who will use a new appraisal after six months. I just completed a refi at about 4.5 months using a new appraisal. But then the lender called last week and said they needed to re-do the loan so that it funded after six months in order to get their investor to buy the loan. So, at least in my case, six months seems to be the minimum for a new appraisal.

Even the one small(er) local bank I tried had the one year time limit to use the new appraisal.

Cash out loans are nearly impossible. In order to make sure you are not doing this they will (in all likelyhood) require that you owe a legitimate bill and they will pay that for you as part of the mortgage. Such as purchase price (but you paid that in all cash, no bill there), construction costs (to avoid a mechanics lein), tax liabilities, ect.

These amounts are going to be paid to the ones who could be in line in front of them (as far as position of their lein goes) and any extra cash that you do get will be minimal.

If you do not have an existing debt that can be attached to the house chances are very low except in the case that you are living in that house and get a line of credit against the house. If it is an investment house, you are not living in it and therefore an HELOC is also nearly impossible.

I have one, obtained in 2008, from a bank whose name would be very recognizable to all. And at that time I shopped for the HELOC at several other banks, many of who were willing to do the HELOC (and some would not).

Somebody else posted they got one too. So the real point would be whether anybody could get one in today's banking environment; that I can't answer.

If you could borrow 80% of the appraised value after six months, you did very well. Congrats on both the deal and the loan.

Ah, that makes senses. OO loans are easier to get and have higher LTVs that NOO loans. I was going to ask what lender was willing to do a NOO 80% LTV loan.