Fix and Flip Loan + Cash Out Refinance?

Question

Has anybody used this strategy previously? I will be closing on a second property in a couple of weeks and I will be in a saving mode for about 2 months before I could possibly close on a third property.

I am wondering if it is possible to obtain a Fix and Flip loan to cover the closing and rehabilitation costs then do a cash-out refinance instead of selling the property like people typically do?

Is there a better strategy to acquire a property with minimal up-front costs? I would love to have a project lined up right after the settlement day for the second property that won't require 20% upfront costs, if possible.

Ethan Kramer · Answer

Thank you everyone for responding. Sorry for the delay in my response, things have been hectic. Looks like we will use HELOC to buy the property cash and to cover the rehab expenses then do a cash-out refinance.

Brett Tvenge · Answer

@Ethan Kramer most banks will require a seasoning period so the process will not be as fast as the one would hope.

Elise Marquette · Answer

Yeah, probably a HELOC. One thing you'd have to contend with on a refi is dealing with the 6 month seasoning requirement (Fannie Mae rule) if you owe on the house. You could go the non-QM route but typically the terms are much less favorable.

Steven Foster Wilson · Answer

If you can buy a property cash, or through a LOC then that will be easiest and most fast. The next thing would be to look for HML who can close in 14 days. You'll end up paying 8-12% interest with 2-4 points up front, but you'll save yourself some headache with the time. One key tip though, make sure you have your refinance lender lined up.