We purchase a single family home to fix and flip it. we initially started down the road of using a hardmoney lender and we were told we needed to put the home into the business name to use the hard money lenders services. we did but we didnt use the hard money lender, it was all out of pocket and lots of sweat equity. we are at the end now and we are trying to do a cash out refinance to go to the next project but we are being told that we must put the home into one of our names and then wait 6 months before we can do this. Our question is, is there a seasoning period if we have owned the house for 2. 5 years and we own it out right with no mortgage against it? Question #2, are there any commercial lenders that would lend on just one finished house? 3rd and final question is, is it worth using a commercial lender with just one house?
There are a plentiful # of secondary market private mortgage lenders, and all of them have different seasoning requirements. Some have 2 years, some 12 months, some 6 months, 3 mo, and even one month. Some lenders offer programs for 'delayed financing' which is really utilized for investors who purchase a property with cash outright (typically need to for sheriffs sale or REO when no interior access is available or time frame to short to get a loan), and then they will actually refinance you up to 90% of original purchase cost + rehab (Experience & Credit will vary your rate and LRTV's). Works great for flippers who have ability to purchase a property outright but want to re-leverage the property.
For your purposes here, a cashout refinance within 6 months often means the lender will only lend based off of the original purchase price rather than the new value (to mitigate risk). Other's might go off new appraised value as long as you are able to document the improvements that were made to the property. Just need to find the right lender.
To answer your questions more specifically:
#1) If you own the property for 2.5 years, there won't be any issues with seasoning requirements. You would be able to get a new loan off of the current appraised value no problem.
#2) Commercial lenders absolutely lend against one property! Most commercials lend down to minimums of $75,000. Some go lower, but most hover around $75k or $100k loan amounts
#3) That's up to you to decide! If you can get a residential mortgage and you qualify, rates are typically lower for residential mortgages. Commercial rates are slightly higher, but UW guidelines are usually more focused on the asset more than your Income and DTI ratio.
Hope this helps!
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing