Refinance immediately after purchase loan close (investment prop)

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Refinance immediately after purchase loan close (investment prop)

Jain P.
Investor · Modesto · Member since 2017 · 14 posts · 6 votes

Can i refinance immediately next day, after closing the purchase loan on investment property.

City: Jarrell, Texas - 76537

The local city lender which i picked has following :

Advantages: 

1.)Can commit to close on time. 

2.)Which means my earnest money of $10K is not at great risk. 

3.)They have good network of appraisal folks, so they can get that in 1 week timeframe.

Disadvantages: 

1.)Section A: origination fees, discount points and worst rate overall, 

2.)No lender credit. 

3.)Total $5K cost difference compared to online lender, along with 1% interest rate difference.


Online Lender: LoanDepot, Better.com, which provides competitive rates.

Local Lender: Keeping it anonymous in this forum.

Also, if it is allowed, can i bump up my interest rate way higher, so that my closing costs(A+B+C+E) are close to $0, so that immediate refinance will not cost be double closing costs?

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Joseph Hummel
Rental Property Investor · Crystal Bay · Member since 2019 · 59 posts · 38 votes
5y

@Katie Greenman

Would you like me to lend you $100 to buy that broken ps5 so you can fix it and resell it on ebay? If so I want you pay me back the original $100 plus 8% due in 90 days. Instead of monthly payments I can roll the interest into the final payment and no payments are due for 90 days, that should give you enough time to fix it and sell it. Since I don’t know you that well I’m going to need $2 up front. Deal?

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  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y
    Originally posted by @Steve Vaughan:

    Paying financing costs and indigestion twice if you don't need to is just a bunch of work, costs and pain.

    I pay cash and self-encumber for PP and rehab.  I can rate and term refi if I want to, only going through the crap once. 

    And why so afraid to leave any $ in a property?  I get the bragging rights of infinite returns,  but it's not like ROE is zero. 


    Good luck in the sub-$200K SFR market in any good-sized metropolitan statistical area these days if you're not putting down cold hard cash on the barrelhead for your acquisitions.

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    5y
    Originally posted by @Jim K.:
    Originally posted by @Steve Vaughan:

    Paying financing costs and indigestion twice if you don't need to is just a bunch of work, costs and pain.

    I pay cash and self-encumber for PP and rehab.  I can rate and term refi if I want to, only going through the crap once. 

    And why so afraid to leave any $ in a property?  I get the bragging rights of infinite returns,  but it's not like ROE is zero. 


    Good luck in the sub-$200K SFR market in any good-sized metropolitan statistical area these days if you're not putting down cold hard cash on the barrelhead for your acquisitions.

    Exactly.  Say you do have a unicorn PML that will finance you 100% (my 15 yr guy that loves me won't even do that) of PP and will go double down unicorn for the rehab also.   

    Finishes laughing and knee slapping... Even if you have to put 20% down (because nothing down isnt the point) you won't be refinancing within 6 months because your off-market, pre-rehab purchase is your best comp for the appraiser. 'Rate and term' won't change that.  

    Focusing on ultra fast and or double financing and not leaving any $ in the deal is distraction.  Focus on long-term good deals and solid improvements.  Focus on reducing redundant financing costs.  Every $3k is a week or 2 of freedom you are giving up. 

    In 10 years it will matter zero if you can brag whether you left a few bucks in the property or not. 

    2Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Steve Vaughan solid PML are not unicorns, as a matter of fact all of mine fund me 100%, you just never asked or never found the right people. 

    You sound like someone who is focused on what the NORM sees and not open to better options. More than happy to show many many HUD's, but sounds like you might still be in disbelief.

    BTW nothing down out of your own capital is the point.  It allows me to retain my own capital for lending and other purposes, thus allowing me to make even more money.  I like to be smart with my $ 😁

    using other people money (OPM) means you NEVER run out of capital so your buying power is greater.  But what do I know 🤷🏼‍♂️

    Also not sure where you’re ASSUMING my rehab is the Comp and CLEARLY missing what I’m saying.  The refi is done AFTER the rehab, thus the appraisal will now match that of legit sold comps.  I’m forcing the equity by rehab.  It’s not hard to understand this, I don’t think anyway.

    I also run a wholesale business, so I have access to legit good deals, hints why and how I know how this works.  I don’t need to put 20% down, but sounds like you do and that’s ok.  You might not be finding the best deals and forced to put 20% down from the jump.  That’s ok, and you might have far more liquid capital than I do or you don’t utilize your own capital to work for you in other ways.


    be open to other creative and amazing opportunities out here everyone.  You don’t have to follow the path of the majority of people. It’s not always the best, but usually the EASIEST and so people get stuck in the trap.

    3Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y
    Originally posted by @Jesse LeBlanc:

    @Steve Vaughan solid PML are not unicorns, as a matter of fact all of mine fund me 100%, you just never asked or never found the right people. 

    You sound like someone who is focused on what the NORM sees and not open to better options. More than happy to show many many HUD's, but sounds like you might still be in disbelief.

    BTW nothing down out of your own capital is the point.  It allows me to retain my own capital for lending and other purposes, thus allowing me to make even more money.  I like to be smart with my $ 😁

    using other people money (OPM) means you NEVER run out of capital so your buying power is greater.  But what do I know 🤷🏼‍♂️

    Also not sure where you’re ASSUMING my rehab is the Comp and CLEARLY missing what I’m saying.  The refi is done AFTER the rehab, thus the appraisal will now match that of legit sold comps.  I’m forcing the equity by rehab.  It’s not hard to understand this, I don’t think anyway.

    I also run a wholesale business, so I have access to legit good deals, hints why and how I know how this works.  I don’t need to put 20% down, but sounds like you do and that’s ok.  You might not be finding the best deals and forced to put 20% down from the jump.  That’s ok, and you might have far more liquid capital than I do or you don’t utilize your own capital to work for you in other ways.


    be open to other creative and amazing opportunities out here everyone.  You don’t have to follow the path of the majority of people. It’s not always the best, but usually the EASIEST and so people get stuck in the trap.

     I understand. I'm caught in a trap. Time to gnaw my leg off in the name of FOMO. Always the same schtick.

    5Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    5y
    Originally posted by @Jesse LeBlanc:

    @Steve Vaughan solid PML are not unicorns, as a matter of fact all of mine fund me 100%, you just never asked or never found the right people. 

    You sound like someone who is focused on what the NORM sees and not open to better options. More than happy to show many many HUD's, but sounds like you might still be in disbelief.

    BTW nothing down out of your own capital is the point.  It allows me to retain my own capital for lending and other purposes, thus allowing me to make even more money.  I like to be smart with my $ 😁

    using other people money (OPM) means you NEVER run out of capital so your buying power is greater.  But what do I know 🤷🏼‍♂️

    Also not sure where you’re ASSUMING my rehab is the Comp and CLEARLY missing what I’m saying.  The refi is done AFTER the rehab, thus the appraisal will now match that of legit sold comps.  I’m forcing the equity by rehab.  It’s not hard to understand this, I don’t think anyway.

    I also run a wholesale business, so I have access to legit good deals, hints why and how I know how this works.  I don’t need to put 20% down, but sounds like you do and that’s ok.  You might not be finding the best deals and forced to put 20% down from the jump.  That’s ok, and you might have far more liquid capital than I do or you don’t utilize your own capital to work for you in other ways.


    be open to other creative and amazing opportunities out here everyone.  You don’t have to follow the path of the majority of people. It’s not always the best, but usually the EASIEST and so people get stuck in the trap.

     I didn't care enough to come back until you accused me of being a normie.  I was the top contributor on the creative, SF and LO boards for years until I lost interest. Normie is a personal attack LOL

    For the average person getting going here, getting lost inside nothing down, nothing in is a waste.  Leverage, sure, but don't get distracted with extremes of any kind. 

    A 10x Napping preservation stage investor would never bother with the skinny delta of borrowing from Peter to lend to Paul.  I borrow for 2 points, lend for 3. I borrow at 8% and lend at 10. Woo hoo. Too much work and risk.  

    4Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    It's not for everyone.  Just keeping options open out there and i'm always sharing and helping others when I can.  Not everyone needs it, not everyone cares, but fortunately it will help a lot of people and open up new doors for some.  So at the end of the day, if this creates opportunities and helps some folks out there, that's what matters to me.

    4Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    5y

    PREACH Steve! Say it one more time for the people in the back!

    For the average person getting going here, getting lost inside nothing down, nothing in is a waste. Leverage, sure, but don't get distracted with extremes of any kind.  

    [email protected]Podcast Guest on Show #261
    BiggerPockets
    3Reply
  • Chris Roberts
    Rental Property Investor · St. Louis, MO · Member since 2021 · 3 posts · 0 votes
    5y

    @Jesse LeBlanc Sounds like a BRRRR? Correct?

    0Reply
  • Chris C.
    Raleigh, NC · Member since 2017 · 347 posts · 94 votes
    5y

    @Jesse LeBlanc

    Isn't it 70% of LTV or appraisal, whatever is less.... Which would be your purchase price. Who do you use that doesn't just take 70% of purchase price since it's just rate and term refi.

    0Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Chris Roberts accelerated version, not having to wait for seasoning and giving you the ability to not leave any capital in the deal if the deal had enough equity at the time of purchase.  Yes sir. :)

    0Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Chris C.Most lenders will do a Refi up to 80% LTV, but there are certainly a lot that will cap out at 75% LTV. But the "Value" in LTV would be the Appraisal, so same thing in your question above. IF you do this before the Cash Out Refi period, then that MAX you can get is your current loan payoff amount + up to 2k or 2% whichever is less and also can include the mortgage lenders fees (origination etc) included into your loan as well AS LONG as it doesn't exceed either the 75 or 80% whichever your lender's max is.

    0Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Chris C. @Chris Roberts this is ALSO the benefit of working with a PML (or HML) that will either up front or offer draws but still give you 100% of the purchase and rehab. This way your loan payoff will be 100% vs other ways of buying then having to leave capital in the deal, at which time a rate and term wouldn't be good, you'd be better off then waiting for the cash out refi allowing you to pull all or some of your original capital invested in the deal back out.

    1Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Jesse LeBlanc:

    @Chris C. @Chris Roberts this is ALSO the benefit of working with a PML (or HML) that will either up front or offer draws but still give you 100% of the purchase and rehab. This way your loan payoff will be 100% vs other ways of buying then having to leave capital in the deal, at which time a rate and term wouldn't be good, you'd be better off then waiting for the cash out refi allowing you to pull all or some of your original capital invested in the deal back out.

    If I'm reading you right you seem to be saying you have to have a private money lender or HML that will loan you 100% of the purchase price plus the rehab. Is that correct?

    0Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Joe S. yes sir. This way it’s not YOUR capital in the deal but it’s secure for your lender due to the equity in the deal plus the trust between you both. 👍🏼

    0Reply
  • Tucker Cummings
    Investor · Raleigh, NC · Member since 2019 · 433 posts · 743 votes
    5y

    I do something similar to this. I just purchased a property for 96k, it was turnkey amd ready to go, but market value is 133k.

    I used a hard money loan to fully fund the 96k, then did a rate term refinance into a 30 year fixed off the ARV and paid off the original hard money loan.

    Only difference was that the 96k hard money loan had to be on the books for 90 days. But it was cash flowing day 1 as an AirBnB so it didn’t really matter.

    6Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Jesse LeBlanc:

    @Joe S. yes sir. This way it’s not YOUR capital in the deal but it’s secure for your lender due to the equity in the deal plus the trust between you both. 👍🏼

    At the moment I do not have any private lenders or hard money lender that does not require something down.

    On the rate and term refinance can I pull out all the money I put down as well as the fix up money?

    0Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Tucker Cummings boom my friend!!! Great example.  I guess you must have a “unicorn” lender as well.  This is such a simple concept yet we have people who don’t want to benefit from these options and not recognize the benefits then immediately make negative assumptions because they don’t understand. Typical nature I see from ppl though.  Totally used to it as I travel, mentor and share.


    I hope you have a ton more my friend, Airbnb’s are awesome to have just make sure it still cash flows as a regular rental too incase you need to turn into a lease purchase option THEN seller finance later and be the bank.  That’s what I do on all of mine now.

    0Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Joe S. that most of the time comes with time.  The more you share on social media for example about what all you’re doing, friends will see it.  They grow trust in you.


    with normal conversations with those friends you will find people who want to invest their Money with you that’s either sitting in a retirement account, a checking account or other.  Randomly you can even make post “who wants to be my bank and make monthly interest on your money at solid monthly rate and secured” you will have ppl reach out.

    0Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Joe S.if you put your own cash in the deal, for example lender pays 100% of purchase but you put 20k of your own into the rehab, you WILL NOT get that back without a cash out refi.  Why??  Because a Rate & Term Refi is only refinancing your current NOTE, which is the loan with whoever your lender is. The new mortgage company will request a payoff from the lender and that’s what they will go off of.

    0Reply
  • Bob D.
    Investor · Marietta, GA · Member since 2017 · 16 posts · 7 votes
    5y

    @Jesse LeBlanc

    Any particular local lenders that you’ve been using?

    0Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Bob D. for the Refi here in GA or FL, you can check with Chuck Fullmer, mortgage broker.  He then works directly with UWM, United Wholesale Mortgage. his number is 404-218-2023.  As for the PML, they only lend to me due to relationship and trust.

    1Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y
    Originally posted by @Jesse LeBlanc:

    @Joe S.if you put your own cash in the deal, for example lender pays 100% of purchase but you put 20k of your own into the rehab, you WILL NOT get that back without a cash out refi.  Why??  Because a Rate & Term Refi is only refinancing your current NOTE, which is the loan with whoever your lender is. The new mortgage company will request a payoff from the lender and that’s what they will go off of.

    I wonder if a rate and term refinance would work if you had a hard money first and a private money second?

    0Reply
  • Jesse LeBlanc
    Investor · Atlanta, GA · Member since 2016 · 627 posts · 374 votes
    5y

    @Joe S. If your refi is with a PML, then you'd probably want it to be a LONG TERM loan, otherwise you're working backwards. Just start with the PML as you most likely will get better terms and higher probability for getting it all covered vs a HML who's in the lending business will want to feel more protected with equity and generally won't fund 100%. Too risky for them for the MAJORITY of people that come to them with deals that are overpriced and they'd be over leveraged.

    With PML, as long as YOU are buying right, secured loan, maybe even a personal guaranty for your lender and have plenty of equity incase **** hit the fan, you could still sell the house in a pinch and at minimum be able to fully pay off your PML so you keep that relationship and trust.

    0Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    So if I have 100k in my pocket instead of using that for purchase and rehab I should find a lender for the purchase and rehab because I need to come into the process with an existing loan?

    I suppose I could give the 100k to my brother and he could be my private lender 😆.

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    5y
    Originally posted by @Tucker Cummings:

    I do something similar to this. I just purchased a property for 96k, it was turnkey amd ready to go, but market value is 133k.

    I used a hard money loan to fully fund the 96k, then did a rate term refinance into a 30 year fixed off the ARV and paid off the original hard money loan.

    Only difference was that the 96k hard money loan had to be on the books for 90 days. But it was cash flowing day 1 as an AirBnB so it didn’t really matter.

    Nice job, Tucker. Sounds like a great purchase.

    I'd just point out, for turnkey properties I want to leverage,  I'll just get a normal purchase loan.  

    Your way costed you $10k to avoid putting $20k down. Plus you have to mess with an LLC and the worse terms that generally puts you into.

    My way: you have $60k in equity and a 30yr loan fixed in the 3s.  Equity is ok. 

    0Reply
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