How To: Cash out Properties without having seasoning restrictions

Cleveland, Ohio
General Real Estate Investing
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How To: Cash out Properties without having seasoning restrictions

Jodi-Ann Birch
Member since 2021 · 13 posts · 6 votes

I am buying two foreclosures (a SFH and a triplex). The intent is to refinance them once I am done with the rehabs and I want to stay clear of the seasoning restrictions often seen on conventional loans. I have been reading up a bit on how to creatively to this and I have two LLCs that operate in separate industries that I was hoping to leverage

Below is the plan I have

1. Have LLC 1 provide the funds for the purchase and provide a mortgage to LLC 2.

2. Have LLC 1 as the lien holder on the title

3. Then I will refinance the mortgage that LLC 2 has and pay LLC1

I hope this provides a better option as I have been calling around and the banks are telling me that if I use my own money I will have a 6month to one-year seasoning period.

Can I get some feedback on the above plan?

Has anyone ever done this and if so could you provide some guidance?

Is there a better way to do this?

If I go this route what steps should I take to make sure this is carefully structured as I am not trying to get into issues with the IRS?

I am open to getting professional help so please recommend any, if possible

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AJ WongBusiness Member
Real Estate Broker · Oregon & California Coast · Member since 2022 · 834 posts · 696 votes
2y
Quote from @Jodi-Ann Birch:

I am buying two foreclosures (a SFH and a triplex). The intent is to refinance them once I am done with the rehabs and I want to stay clear of the seasoning restrictions often seen on conventional loans. I have been reading up a bit on how to creatively to this and I have two LLCs that operate in separate industries that I was hoping to leverage

Below is the plan I have

1. Have LLC 1 provide the funds for the purchase and provide a mortgage to LLC 2.

2. Have LLC 1 as the lien holder on the title

3. Then I will refinance the mortgage that LLC 2 has and pay LLC1

I hope this provides a better option as I have been calling around and the banks are telling me that if I use my own money I will have a 6month to one-year seasoning period.

Can I get some feedback on the above plan?

Has anyone ever done this and if so could you provide some guidance?

Is there a better way to do this?

If I go this route what steps should I take to make sure this is carefully structured as I am not trying to get into issues with the IRS?

I am open to getting professional help so please recommend any, if possible

Hi Jodi..most lenders will require a six month seasoning however it's possible to use the purchase price and do an immediate cash out refi or first position HELOC. Check in with @Joseph Chiofalo he’ll give you some solutions. Good luck. 

541-800-0455
Sesemi | STR Brokers powered by Fathom Realty 516 Reviews
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  • AJ WongBusiness Member
    Real Estate Broker · Oregon & California Coast · Member since 2022 · 834 posts · 696 votes
    2y
    Quote from @Jodi-Ann Birch:

    I am buying two foreclosures (a SFH and a triplex). The intent is to refinance them once I am done with the rehabs and I want to stay clear of the seasoning restrictions often seen on conventional loans. I have been reading up a bit on how to creatively to this and I have two LLCs that operate in separate industries that I was hoping to leverage

    Below is the plan I have

    1. Have LLC 1 provide the funds for the purchase and provide a mortgage to LLC 2.

    2. Have LLC 1 as the lien holder on the title

    3. Then I will refinance the mortgage that LLC 2 has and pay LLC1

    I hope this provides a better option as I have been calling around and the banks are telling me that if I use my own money I will have a 6month to one-year seasoning period.

    Can I get some feedback on the above plan?

    Has anyone ever done this and if so could you provide some guidance?

    Is there a better way to do this?

    If I go this route what steps should I take to make sure this is carefully structured as I am not trying to get into issues with the IRS?

    I am open to getting professional help so please recommend any, if possible

    Hi Jodi..most lenders will require a six month seasoning however it's possible to use the purchase price and do an immediate cash out refi or first position HELOC. Check in with @Joseph Chiofalo he’ll give you some solutions. Good luck. 

    541-800-0455
    Sesemi | STR Brokers powered by Fathom Realty 516 Reviews
    WebsiteView Page
    2Reply
  • Joseph Chiofalo
    Banker · Henderson, NV · Member since 2023 · 317 posts · 74 votes
    2y

    Hi Jodi-Ann, 

    There are lenders that will allow to pull equity out after 3 months seasoning has passed. 

    How much cash are you looking to pull out and what do you expect the value to be after repair work is completed?

    1Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    2y

    @Jodi-Ann Birch
    since you are looking in Cleveland I have a lender that does cash out refi with no seasoning. It's a portfolio product with a local bank. I have used them on a couple of BRRRR projects to refi out once I am done. It would be a lot easier to use them than following this post.

    [email protected]614-412-4565
    Reafco-556 Reviews
    View Page
    0Reply
  • Jodi-Ann Birch
    OP
    Member since 2021 · 13 posts · 6 votes
    2y

    @Joseph Chiofalo

    about 80%- 85% if possible. 

    ARVs: 120K on SFH and 140K on triplex

    0Reply
  • Jodi-Ann Birch
    OP
    Member since 2021 · 13 posts · 6 votes
    2y

    @Patrick Drury, thanks; would you share who these are. I am open to anything that is better

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    2y
    Quote from @Jodi-Ann Birch:

    I am buying two foreclosures (a SFH and a triplex). The intent is to refinance them once I am done with the rehabs and I want to stay clear of the seasoning restrictions often seen on conventional loans. I have been reading up a bit on how to creatively to this and I have two LLCs that operate in separate industries that I was hoping to leverage

    Below is the plan I have

    1. Have LLC 1 provide the funds for the purchase and provide a mortgage to LLC 2.

    2. Have LLC 1 as the lien holder on the title

    3. Then I will refinance the mortgage that LLC 2 has and pay LLC1

    I hope this provides a better option as I have been calling around and the banks are telling me that if I use my own money I will have a 6month to one-year seasoning period.

    Can I get some feedback on the above plan?

    Has anyone ever done this and if so could you provide some guidance?

    Is there a better way to do this?

    If I go this route what steps should I take to make sure this is carefully structured as I am not trying to get into issues with the IRS?

    I am open to getting professional help so please recommend any, if possible

     You need to wait 6 months to get the full value or you can refi right away but only at the PP. 

    Have you purchased in Cleveland ? Who walked the property for you? How do you know it's a good deal? 

    0Reply
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