Yonkers, NY · Member since 2018 · 2 posts · 0 votes
I am purchasing a 7-unit apartment building using a hard money loan. The property is going to be delivered with 3 vacant units, which should allow us to renovate immediately. I expect to be fully renovated and leased up within 6-7 months and would like to cash-out refinance as soon as possible. Is there a seasoning period that would prevent me from refinancing into a 30yr conventional mortgage?
There could also be a pre-payment penalty if you refi. I used an HML that had a 90 day requirement and then the conventional bank had a 6 month seasoning period from *original* purchase date.
1. A 30yr conventional mortgage isn't typically available with a local bank. "conventional" either references residential 1-4 unit loans (30 yr available) OR bank type loans (30 yr not readily available).
2. Generally seasoning is not an issue IF you have re-positioned the property (like the rehab that you are planning on doing. People run into seasoning issues when they buy a property and say that it immediately has a magical 20-30% increase in value. This doesn't work because guess what the primary driver for the value of a property......what someone is willing to pay for it... This wouldn't be an issue for you because the property that you WILL have will be different than that property that you purchased, thus justifying the new value.
@Mark Ruiz Conventional 30 yr fixed mortgage is only for 1-4 unit residential properties. This being a 7 unit property, you only qualify for a commercial loan.
Typically commercial loans will have seasoning from the point that property is stabilized, e.g. 90 day seasoning once 90% occupancy has been achieved.
Your options will depend on the size of the transaction. If it is $1MM+ that you could qualify for a small balance agency loan, which has standard terms. If it is below, $1MM then each bank has its own terms.