BRRRR Lenders without Seasoning Period

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BRRRR Lenders without Seasoning Period

William Barr
Investor · Atlanta · Member since 2021 · 18 posts · 5 votes

Hello!

I am looking for a lender to use for BRRRR deals that will allow me to refinance without a "seasoning period" on the original mortgage. I know that the typical time period to refinance is 6-12 months, but I've heard of people finding some lenders/banks that will allow the investor to refinance as soon as the property is rehabbed and rented.

Where should I be looking for these type lenders?

Thank you!

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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
4y

@William Barr wow, so glad I found this post. Rule #1 when using the BRRRR strategy - NEVER work with a lender that requires ANY seasoning.  None.  Have to have it.  I need to refinance RIGHT away in order to get the BRRRR strategy to work.  Now, maybe there's some structuring issues on how you might purchase the property - which is why we should be getting PREQUALIFIED before we purchase a property.  That way I know how to structure the transaction so I don't face any seasoning. But an option needs to be shown to me how I can refinance right away.  I'll include the normal list of questions I tell everyone to ask their lenders when they are interviewing them to find out if they are "investor friendly" or not but I actually wrote an entire post on that subject that you can find HERE.  Feel free to read up on it and let me know if you have any other questions on this topic.  Thanks for posting!

Questions for Lenders

  1. When do you start using rental income to help me qualify? (the answer needs to be immediately)
  2. When do you start using “After Repair Value” on my property? (also needs to be immediately)
  3. How long do you need me to be on title to refinance? (this is important if you do need a short term loan to purchase then refinance out - and the answer should be 1 day...very important that it is 1 day on title is all that is needed to refinance)
  4. What is my minimum down payment required? (if they only require 15% down on a single family home that is usually a good sign that you are working with a flexible lender)
  5. How many loans can I have with you?
  6. Can I change title to my LLC?
  7. Do you sell your mortgages?
  8. What is your loan minimum?
  9. Can you explain to me what your reserve requirements are?
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  • Antoine Martel
    Rental Property Investor · Miami, FL · Member since 2017 · 2k+ posts · 911 votes
    4y

    Hi William,

    From my research, most lenders won't refi without some sort of seasoning period. Mind you, most of them are only 3 months not 6. Depending how long it takes to rehab and find a tenant, this may be a very reasonable time frame.

    Portfolio refinancing is even easier! Lower seasoning period, better interest rates and you get to consolidate your debt. Some lenders I like for refinancing with 3 month seasoning periods are Kiavi, Corevest and LimaOne and Flat Iron Realty Capital.

    2Reply
  • Simmy AhluwaliaPro Member
    Lender · Atlanta, GA · Member since 2015 · 1k+ posts · 200 votes
    4y

    William, some lenders will allow the borrower max LTV (after 1 month of title seasoning) as long as their cost to purchase and renovate the property, is equal to or more than their max LTV allowable, i.e. 75%

    0Reply
  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    4y

    @William Barr wow, so glad I found this post. Rule #1 when using the BRRRR strategy - NEVER work with a lender that requires ANY seasoning.  None.  Have to have it.  I need to refinance RIGHT away in order to get the BRRRR strategy to work.  Now, maybe there's some structuring issues on how you might purchase the property - which is why we should be getting PREQUALIFIED before we purchase a property.  That way I know how to structure the transaction so I don't face any seasoning. But an option needs to be shown to me how I can refinance right away.  I'll include the normal list of questions I tell everyone to ask their lenders when they are interviewing them to find out if they are "investor friendly" or not but I actually wrote an entire post on that subject that you can find HERE.  Feel free to read up on it and let me know if you have any other questions on this topic.  Thanks for posting!

    Questions for Lenders

    1. When do you start using rental income to help me qualify? (the answer needs to be immediately)
    2. When do you start using “After Repair Value” on my property? (also needs to be immediately)
    3. How long do you need me to be on title to refinance? (this is important if you do need a short term loan to purchase then refinance out - and the answer should be 1 day...very important that it is 1 day on title is all that is needed to refinance)
    4. What is my minimum down payment required? (if they only require 15% down on a single family home that is usually a good sign that you are working with a flexible lender)
    5. How many loans can I have with you?
    6. Can I change title to my LLC?
    7. Do you sell your mortgages?
    8. What is your loan minimum?
    9. Can you explain to me what your reserve requirements are?
    3Reply
  • Pamela GordonPro Member
    Rental Property Investor · Charlotte, NC · Member since 2021 · 36 posts · 36 votes
    4y

    @Andrew Postell  definitely will take note of everything you mentioned.  Now I know the questions to ask when looking for a lender...good stuff.

    2Reply
  • William Barr
    OP
    Investor · Atlanta · Member since 2021 · 18 posts · 5 votes
    4y

    @Andrew Postell  Wow! Great stuff here. Thank you for taking the time to help me learn. I'll be sure to give your other post a read as well.

    1Reply
  • Bobby FeinmanBusiness Member
    Lender · VA Beach, VA · Member since 2019 · 917 posts · 91 votes
    4y

    William

    There are many different "DSCR" programs out there. Most have a seasoning period of at least 6 months. There is a program that allows up to 80% cash out with NO seasoning. To qualify, rehab needs to be done on the property, the property must be leased and will need to verify actual cash in the deal. Hope that helps!

    [email protected]757-222-5937
    0Reply
  • Brent Huling
    Member since 2020 · 38 posts · 35 votes
    4y

    Bringing this back up. I started looking at a DSCR loan for a new rental I am purchasing. Spoke with Kiavu and loved what they had to say. I told them I was going to do some remodeling before I rented, and they shared their bridge loan which is their bread and butter product. 10% down vs. 20%, quicker close, 100% rehab funds, etc. I had never considered this option. Between saving 10% and not paying for the rehab upfront out of pocket, that is $300k in my pocket to invest in other things. Totally sold on them....until they just found out they can't do this loan in Oregon now for the time being. Ugh! Anyone know of a similar program? Hoping I can find something just like this with another company that can work in Oregon. Thanks!

    1Reply
  • Jonathan Taylor
    Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
    4y

    @Brent Huling You have plenty of options. Ill contact you further if you still need help.

    0Reply
  • Bobby FeinmanBusiness Member
    Lender · VA Beach, VA · Member since 2019 · 917 posts · 91 votes
    4y
    Quote from @Brent Huling:

    Bringing this back up. I started looking at a DSCR loan for a new rental I am purchasing. Spoke with Kiavu and loved what they had to say. I told them I was going to do some remodeling before I rented, and they shared their bridge loan which is their bread and butter product. 10% down vs. 20%, quicker close, 100% rehab funds, etc. I had never considered this option. Between saving 10% and not paying for the rehab upfront out of pocket, that is $300k in my pocket to invest in other things. Totally sold on them....until they just found out they can't do this loan in Oregon now for the time being. Ugh! Anyone know of a similar program? Hoping I can find something just like this with another company that can work in Oregon. Thanks!

    @Brent Huling:

    This is the preferred strategy with many of my clients. Start with a short term loan to rehab the property and then refinance with a DSCR loan. In most cases, clients get most/all of their cash back at refinance as long as the ARV supports it. With respect to down payment, we are close to 10% down. I think it averages 10-12% depending on the deal

    Last but not least, there is NO SEASONING as long as rehab was done to the property!

    Bobby

    [email protected]757-222-5937
    0Reply
  • Brent Huling
    Member since 2020 · 38 posts · 35 votes
    4y

    Still looking for a 90% LTV 100% Rehab 70% ARV loan, 1-2 points and 8% or better on interest rate. $1.55 purchase price and $200k rehab loan. This is for a single family home and plan on doing STR after the rehab is done. Gross revenue will be $200k+ per year. If anyone has this, please reach out. Thanks.

    0Reply
  • Albert Bui
    Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes
    4y
    Quote from @William Barr:

    Hello!

    I am looking for a lender to use for BRRRR deals that will allow me to refinance without a "seasoning period" on the original mortgage. I know that the typical time period to refinance is 6-12 months, but I've heard of people finding some lenders/banks that will allow the investor to refinance as soon as the property is rehabbed and rented.

    Where should I be looking for these type lenders?

    Thank you!

    Even if you can refinance earlier doesnt mean its the best route to take because often times when you refinance too early with out other sold comps that are near peers to your property, what tends to happen is that your property magically appears as one of your comps.

    This can be the kiss of death for value coming in higher if you dont have other comparable solds that are much higher because your original purchase price will be used against you. AT this point you'll need to document all the additional work you've done to to push value high enough so that your BRRR wont be a failure and you'll be able to get back most or all of your rehab funds and equity/down payment funds you've contributed as well.

    One way to address the topic above is to use private financing or notes so that you can include the purchase price, the rehab, and the carry cost all into one note that is recorded on the property up to what you believe will be 75% LTV so that you can do a regular refinance (rate & term refinance) versus a cash out refinance which requires 6 months seasoning on title (rate term has no seasoning period only +1 day after you close, you can R&T refinance again technically).


    0Reply
  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    3y

    Only 90 days with us to use new appraised value for up to 75% cash out. 

    [email protected]818-606-8823
    Investor Property Loan5306 Reviews
    WebsiteView Page
    0Reply
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