Refinance within 6 months or purchase?

4 Replies

Hi All!

I am involved in my first few BRRRR deals and am realizing that the refi part of it isn't as simple as I thought. It seems that many banks dont allow for a refi within the first 6 months. Some allow for what they called delayed financing - which means you can only get financing on the cash that you put into the deal, but not more...

Does anybody have a good connection of a lender that specializes in getting good terms and rates on a refi within the first 6 months? I'm in touch with a few people, but wanted to see if the forum had any insight on this. Is it reasonable to expect to find a conventional method with low interest rates within this period of time?

Thanks!

@Tuvia Goldstein I am glad to hear that you are taking advantage of the BRRRR model. Conventional banks will want you to own the property for at least 6 months before refinancing. They will also only allow you a certain number of loans and want you to place the properties in your name rather than a company.

For this reason, I have moved towards commercial lenders. The local commercial lender that I use in my market can fund up to 80% Loan to Value of the property. I can also refinance out of my project as soon as the unit is done being rehabbed. 

I would suggest trying to sit down with three commercial lenders in your area. Bring them your portfolio and business plan. Explain to them what you are trying to do with the BRRRR model and see if they can help you. Let me know if I can help in any other way.

Best Regards, 

Derek

There are some national SFH lenders like Lima One Capital and A10 Capital you can look into, although they will usually have a decent number of points and higher rates. We've had the best luck with community banks. Many won't be interested, but some are. And you only need to find one.

Originally posted by @Tuvia Goldstein :

Hi All!

I am involved in my first few BRRRR deals and am realizing that the refi part of it isn't as simple as I thought. It seems that many banks dont allow for a refi within the first 6 months. Some allow for what they called delayed financing - which means you can only get financing on the cash that you put into the deal, but not more...

Does anybody have a good connection of a lender that specializes in getting good terms and rates on a refi within the first 6 months? I'm in touch with a few people, but wanted to see if the forum had any insight on this. Is it reasonable to expect to find a conventional method with low interest rates within this period of time?

Thanks!

Always try to find conventional money or bank money first. It's cheaper and even if you have to wait the 6 months, it's going to save you money in the long run. Find a local bank that servicers their own loans. They may be able to help. If not, then a commercial mortgage broker is your next best bet. Rates and terms are not as favorable, but they close with less documentation.

Best of luck

Stephanie

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