I need some "Delayed Financing" clarity
Back Story: I purchased a property for $50,000 cash with a partner two months ago. We looked at doing a cash-out refi and had the property appraised in the process by the bank. Appraisal came back at $118K. In this process we would have to wait 6 months. We want our money NOW haha
We are exploring the Delayed financing option now to get our money back and do some work to the property. I am extremely unclear on the way it is written on the terms in which we can get our money back. It says:
-You can get up to the purchase price back through the DF option
But, also say,
-You can receive up to 70% LTV (Triplex)
Has anyone done this kind of loan AFTER the fact? I am currently doing the DF option on a SFH I close on next week, but we are billing the closing statement for construction costs. Which falls in line with the PP eligibility.
Any info will help!
Happy Investing!!
Most Popular Reply
Hi @John Hamilton, I recently applied for a delayed financing loan after purchasing a house in cash with partners. The two criteria you mention mean that the max amount you can receive for the loan corresponds to whichever is the lower of those two numbers. For example, say the house you bought for $50k is worth $80k; then your loan cannot exceed EITHER $50k (your acquisition costs; this can also include closing costs etc) OR 70% of $80k = $56k. Since your acquisition cost is the lower amount, you are limited to $50k. (side note, I'd think you should be able to easily find >70% LTV; my bank offers 75% for DF)
Sounds like you've set yourself up nicely on your current transaction by adding the rehab costs to your closing statement thereby increasing your loan minimum per the first ccriteria (acquisition costs). I haven't done it yet but heard that the strategy has worked well as a way to get around 6-month seasoning for a BRRR-type deal.
I'll add that I ran into trouble obtaining delayed financing since I was applying for the loan in my personal name, but had purchased with funds out of the joint account for the partnership. Hopefully you won't face the same issues.
Finally, you may want to check out this post as another example of a creative way to quickly recover funds from a cash purchase: https://www.biggerpockets.com/…
Happy investing!