Buy Cash Refi Repeat

14 Replies

I have some cash saved up, and want to put it to work and buy up a portfolio of properties. I own 9 units so far that I purchased traditionally- but now I want to try and scale fast. I would like to buy cash at 70% LTV then refi out when I lease out the property, then repeat!

Any tips on this process? Thanks guys! 50 units is the goal! 

Many local banks will not let you buy cash and then refi out 100%.  

Thats a bummer. I am meeting with banks this week, will run scenarios by them and see how it works out.

Originally posted by @Benjamin Maciel :

Thats a bummer. I am meeting with banks this week, will run scenarios by them and see how it works out.

I have found a local bank that will let me refinance out up to 85% LTV. Good luck!

Hi Rashad- there seem to be a few requirements I would have to meet? Have you done this before using the delayed exception?

Originally posted by @Benjamin Maciel :

I have some cash saved up, and want to put it to work and buy up a portfolio of properties. I own 9 units so far that I purchased traditionally- but now I want to try and scale fast. I would like to buy cash at 70% LTV then refi out when I lease out the property, then repeat!

Any tips on this process? Thanks guys! 50 units is the goal! 

Do you mean 70% of market value? That' s basically what I've started doing. Basically the BRRR purchasing with cash.

@Eric James yes- just buying cash to close the deal, and then refi once rented out. If the deal is good enough and doesn't require any work, why not right? 

@Benjamin Maciel
Good luck finding deals at 70% of ARV that don’t need any work...I would start to grow your network of contractors because you will most likely need to be rehabbing in order to find deals allowing you to refi all your capital. Deals that “don’t need any work” will need $10k in misc repairs/rehab.

Also if you buy “below market value” and don’t do any work on the property, guess what the appraiser is going to value your property at? The exact price you paid for it. I’m not saying it’s right, but it’s probably what will happen. I speak from experience...

But anyways if you do find the deals, you will want to find a portfolio lender. They are a needle in a haystack but oh boy if you find them they are awesome! I have a local lender that does 80% LTV, no seasoning, 30 year amortization, lends to LLCs, and at a competitive interest rate. Game changer!

@Benjamin Maciel

No problem...and if you do get into rehabs, take before/after pics to document all the work that was done and EXPLICITLY point it out to the appraiser IN PERSON. Make sure they know that everything is new. If they don’t, they will make all kinds of (wrong) assumptions. Again, speaking from experience :)

Check out the 50% rule for buying rentals to make sure your expectations are in line with what it takes to survive the acquisition of 50 properties and manage the cash flow.  People tend to leverage too high and get between 20-30 properties before finding out the 50% rule would have been really helpful to know before they got into that range.  20-30 units purchased at the wrong numbers will eventually put someones wallet to the test.

Absolutely the 50% & 2% rule are great. Thanks for your input Ian Walsh. Adding this to the checklist! 

Hello Benjamin,

The way to accomplish your particular goal is the acquire foreclosed properties at a steep enough discount including rehab so that when you refinance the ARV is high enough to cash out all your original funds at 70LTV. Additionally, make sure the cash flow is strong enough to support a loan at 70% LTV. Lastly, find a bank/ portfolio lender with little or no value seasoning so you are able to cash out based on fair market value once property is rehabbed and tenant placed. I've done 50+ times. Been recycling the same funds for years. Are you buying in the same state as where you live?

@Kyle M. Do you mind sharing which local lender does that for you?

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