A few questions about BRRRR

[Lindsay G.]

Hello! I'm planning on starting the BRRRR strategy for out of town properties next year after I sell my condo. I will have a fair amount of cash to get started. A few questions. 1. If you have the cash is it better to use it for these instead of initially financing?

2. Is there still a seasoning period for refinancing with a conventional loan if you pay cash for the property? 

3. If I do delayed financing to get my money back quicker, should I still be looking to refinance once it's seasoned to get more cash out if 100% of the HUD (including rehab costs) is less than 75% of the LTV (which obviously I hope it is) ?

Thank you!

[Jerry Padilla]

@Lindsay G.

1. It depends on your situation. If you purchase u see market value and are planning to make improvements to increase the value - then yes, purchase with cash.

2. Refinancing without a cash out has no seasoning period. 

If you pay cash for the property, you can cash out prior to 6 months with delayed financing, but you will be limited to a max cash out of your initial investment. There are some strategies to increase your initial investment to include renovations, but Fannie Mae is cracking down, so there is no guarantee. They can change their guidelines as they see fit. 

3. That will be too costly. Just cash out refinance once. I have had clients go to do delayed financing and the appraisal comes back higher than expected (this doesn’t happen often) so they delay the refinance a couple months to get more cash back.