Cash Purchase Refinancing

[Collin DeWese]

Hello everyone. 

Here is the situation I am currently in and trying to resolve. About a week ago I bought a single family rental with cash and I bought it way under value. I would like to refinance it asap for the appraised value but banks are telling me due to federal regulations they can only finance up to 80% of the lower value between purchase price + rehab costs or the appraisal. Is this accurate? My goal is to refinance this property to be 0 dollars invested at the very least. I would prefer to refinance and do a cash out off at least 80% of the appraised value however. Any information is much appreciated.

[Tanner Cohen]

Hey @Collin DeWese, 

Unfortunately, that is correct. It's the "seasoning requirements". This is to help lenders determine what the property is really worth and so that the lender knows the risk that they are taking when financing your property. I am a private money lender and I adhere to the same guidelines. Unless you've completed verifiable upgrades to the property you are going to have to wait 6 months to refinance at 80% of as-is value. 10-20% skin in the game is what hard money is looking for, so I recommend cashing out 80% and financing/doing your rehab so that you bring more value to the home now then c/o again once improvements are completed. That way most of your money isn't tied up in the property and is back in your pocket / working for you.  

I know that you want all of your investment back, you may find other private or hard money lenders out there that are willing to take that risk, so posting on the BP platform is a good move to get the attention of someone willing to do just that. But in all honesty, I personally don't of any. Good luck.