Refinancing on a rent to own deal

3 Replies

Hi everyone,  I'm looking to use the Brrrr strategy for my 1st deal but instead of just renting it out I'm wanting to do a lease option/ rent to own to lower my expenses and increase rent and cash flow.  I'll be using personal credit and a hard money loan to buy the house and fund the rehab.  My question is will I have problems getting a cash out refinance after the 6 months of seasoning or will it be treated the same as a normal rental property... thanks in advance!

Originally posted by @Raymond Stinson :

Hi everyone,  I'm looking to use the Brrrr strategy for my 1st deal but instead of just renting it out I'm wanting to do a lease option/ rent to own to lower my expenses and increase rent and cash flow.  I'll be using personal credit and a hard money loan to buy the house and fund the rehab.  My question is will I have problems getting a cash out refinance after the 6 months of seasoning or will it be treated the same as a normal rental property... thanks in advance!

It depends on the lender you use and the way you write up the deal. You want to talk to a lender about what they are willing to do.

If you are using hard money to do a lease option, it isn't clear to me how that works. Normally a lease option is between the buyer and the seller and a HML is not involved. Same with a rent to own. How does the HML fit into the deal?

The hard money loan isn't the issue because I'll be using that to buy the property up front in my personal name.  What I'm worried about is if I have a tenant who's doing a rent to own,  will I still be able to do a cash out refinance to pay off the hard money loan with a conventional bank in my personal name.