Cash-Out Refi vs. Delayed Financing: Can't decide!
I can't decide whether it's worth it to immediately do a Delayed Financing cash-out upon completion of rehab, or whether to wait 6 months and do a regular, cash-out refi. If I'm reading the eligibility matrix correctly (what a document! oy), the LTV's available for both products are the same. That is, 75% LTV for a SFR, investment property.
However...
Delayed Financing Pros: can get house appraised before tenant moves in
Delayed Financing Cons: cash-out amount is limited to initial purchase price + fees
Am I missing anything? Theoretically, it seems that if the house was a really good purchase and the rehab was done well, it might make sense to wait 6 months for a regular refi, because the ARV is going to be higher than the initial purchase price + fees.
What would you do?
Most Popular Reply
My first question is how quickly do you want to reinvest the money, and how many properties do you want to acquire over a 12 month period? If your goal is to grow your portfolio at a quick pace then I would pay the higher rate and cash out up to 75% of fair market value by refinancing though local commercial lender or private equity firm that doesn't have a value seasoning restriction. If your goal is to buy 1-2 properties per year, I would wait 6 months and cash out based on fair market value at the best rate/term.