cash-out refi --> BRRRR --> delayed financing... A problem?
I have pulled capital out of my existing properties to fund new deals. I have enough to cover cash purchase + rehab for a typical deal, and plan to recycle the funds for multiple deals. My objective it to BRRRR with cash up front and then to get a loan immediately after rehabbing and getting a tenant, to then proceed with the next property.
The "delayed financing" rule allows you to avoid the usual 6-month seasoning period before doing the cash-out loan. But here's the rub: It seems if the purchase was funded with assets drawn from equity on another property, the proceeds from the new loan must be used to repay the original loan. That defeats the purpose! Have you dealt with this?
A couple of twists here...
1. My funds are coming from two places: a HELOC on one property and a refi that's about to close from another. It seems to me, since the HELOC is a revolving credit line, I could pay it back and still have immediate access to the credit. Am I missing anything here? I wonder if I should put the brakes on my refi and do an additional HELOC instead?
2. Another possibility is to borrow from a private or hard money lender to make the purchase, and then use my equity funds to pay back whatever isn't covered by the new mortgage.
Opinions or advice?
Also... The last two Rs of BRRRR are Refi + Repeat. Doesn't this restriction make that nearly impossible without a 6-month wait?