Delayed financing/cash out refi??
Rental Property Investor · Member since 2021 · 15 posts · 6 votes
Delayed financing/cash out refi??
Most Popular Reply
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
$275-$295.
I wouldn't want a cash out refi. I just want an outright refi straight after purchase.
@V.G Jason Anytime you walk away with cash it is a "cash out refi" even if getting your own cash back. In your above scenario you go with delayed financing but you would be limted to what you purchased the property for plus closing costs/pre-paids or 75% loan to value what ever is lower. So, in assuming your 170k purchase price with a 295k value you can pull out the 170k cash you purchased the property for but not the cash you put in for rehab.
To do that what we do is a bridge loan out of our pocket so we make our rules. With a solid appraisal we do not have any seasoning requirement at all. We would lend up to 75% loan to value which would be 221,250 (sometimes we will go up to 80% loan to value) so you walk away with your cash. We then immediatly refiance that 221,250 loan amount to a long term fixed program as a rate/term refi. The key is that rate/term refi's do not have seasonsing periods to use the improved value. So, by doing this you have pulled your cash back out for the next project and have a long term fixed rate.
again, it goes back to what the property is worth. if it is worth 175k no one is going to give you 175k. What is the property worth the day after you close?
The you clearly understand you are asking for a 100% mortgage right? You will not get that. And investors often are able to buy properties under market value, so it is not always a "clear" issue. if the house was worth 235k you could get back your 175k the next day. If the house is worth 175k you could get back 131,250 the next day.
I'm not asking for a 100% cash out, I know normal 75-80% LTV. I want that right after I close. My OTP will be 20-25% essentially.
Then you can do the delayed fiancing which as I put in several post above.
"If the house is worth 175k you could get back 131,250 the next day." That is 75% of the value of the house. Clear?
Hurst Real Estate, INC4.991 Reviews
19 Replies
- 3yDevin PetersonBusiness MemberLender · Sarasota, FL · Member since 2022 · 2k+ posts · 667 votes
6 months seasoning required for new appraisal value on all cash outs - I had a conversation with another investor some lender on BP said they have a 3 month seasoning requirement which doesn't sound right. But all cash out Refis require 6 months from original acquisition for DSCR
ProAlpha Capital56 Reviews - 3yDoug SmithPro MemberLender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
They are telling you the truth about most DSCR programs. For the first 6 months, we use the lesser of purchase price + rehab that you can document or the appraised value. After 6 months, we use the appraised value to set the loan amount. Purchase deals are less expensive than cash-out refinances, but the term "delayed financing" is a tactic that is most often used when an entity buys a property for cash for some reason (usually timing) but then quickly refinances it to put longer-term financing on the property. It was created for those situations were there wasn't enough time to process a loan in order to make a short closing date. They are telling you the truth. I really don't have another solution other than waiting for 6 month to use the appraised value as the ARV. I wish I had an answer that was more pleasing to you, but this is the correct answer. Good luck to you.
- 3yRobin SimonBusiness MemberLender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
Quote from @Jeff Bodenmuller:
Hey all the financial guru's out there! Got a question.
We purchased a wholesale property in Venice FL Feb of this year.
Our plan is to rehab it within a couple months and turn it to airbnb!
Ok, so back before we bought we had a conversation with our lender and explained our strategy. They said a DSCR loan was they way to go for a cash out refinance.
So we are currently in the middle of that refinance. Our lender said they are switching it to delayed financing because the cash out will not work because of the seasoning period of 6 months...The delayed financing was a lower interest rate but they are basing it off our purchase price which was wholesale. Even though they did an appraisal and rent estimate.
Problem then becomes we are not getting all our cash back out that we put in because they are using our original purchase price!
Does anyone have any suggestions on what we should do?
Yes we understand we can wait a couple more months and do a standard cash out refi but we are trying to get our money Asap so we can roll into another deal.
Thanks everyone!
What LTV / cash out amount are you looking for? There are some DSCR Lenders that will do a real DSCR cash-out refinance prior to 6 months seasoning, it just typically will have some minor limits on leverage and some other requirements (like a higher credit score, experience, etc.)
Harpoon Capital514 Reviews - Rental Property Investor · Member since 2021 · 15 posts · 6 votes3y
Quote from @Devin Peterson:
6 months seasoning required for new appraisal value on all cash outs - I had a conversation with another investor some lender on BP said they have a 3 month seasoning requirement which doesn't sound right. But all cash out Refis require 6 months from original acquisition for DSCR
- Rental Property Investor · Member since 2021 · 15 posts · 6 votes3y
That's what we figured. Bummer, wish there was another way to get money out of this deal before August.
Thank you both!
- Rental Property Investor · Member since 2021 · 15 posts · 6 votes3y
Looking for 75 percent ltv
- New to Real Estate · Valencia, CA · Member since 2022 · 26 posts · 11 votes3y
Same scenario here! We closed in March, rehabbed, rented and we're ready to refinance, but conventional loans need a 6-12 month seasoning period and a DSCR loan will only give us 63% LTV, astronomical closing costs, and STILL won't come even near to reimbursing us for HML loan or our out of pocket costs.
Our solution: We found a local bank that will give us a conventional loan (non-owner occupied), 20 year term, 7.9% with a three year arm and we are going to JUMP on it. The bank will work with us on a refi to a 30 year loan after their 12 month seasoning period requirement. We pay a bit more out of pocket now, but we'll get debts paid, rehab costs ALMOST covered and by next spring we will hopefully start making some cash flow. BRRRR is hard right now. Good luck!
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
Hurst Real Estate, INC4.991 ReviewsQuote from @Jay Hurst:
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
$275-$295.
I wouldn't want a cash out refi. I just want an outright refi straight after purchase.- 3yAndrew PostellPro MemberLender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
@Jeff Bodenmuller sorry that you are finding this out after the fact. Many of us started out just taking our first partner's word for things because that's the only people we knew! One of the first lenders I spoke to said the BRRRR method was illegal! And they are probably in the same boat we are - maybe their company doesn't know how to do these techniques or maybe they don't even offer the products. So don't feel like they are bad people or anything. It's probably not their fault either.
You do not have to face seasoning. Either you haven't structured your transaction correctly or you are working with the wrong lenders. Neither is your fault but going forward you will have the proper information.
First, let's read this post HERE on "How to find real estate friendly lenders". It even gives you the questions you should be asking your potential lenders.
Next, read this post HERE on "How to Cash Out" a property.
Those will help you on your NEXT deals. Although, the first post can help you find better lenders for your current property. On this one, you can certainly find a DSCR lender with no waiting. 3 months of seasoning is reasonable to me, since it takes me a month or two to rehab my properties, but please don't work with a lender that will require MORE than 3 months of waiting. I mean, you can do what you want - but if you want the best loans, then no seasoning...and maybe 3 months is ok.
Hope all of that makes sense. Thanks!
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
$275-$295.
I wouldn't want a cash out refi. I just want an outright refi straight after purchase.@V.G Jason Anytime you walk away with cash it is a "cash out refi" even if getting your own cash back. In your above scenario you go with delayed financing but you would be limted to what you purchased the property for plus closing costs/pre-paids or 75% loan to value what ever is lower. So, in assuming your 170k purchase price with a 295k value you can pull out the 170k cash you purchased the property for but not the cash you put in for rehab.
To do that what we do is a bridge loan out of our pocket so we make our rules. With a solid appraisal we do not have any seasoning requirement at all. We would lend up to 75% loan to value which would be 221,250 (sometimes we will go up to 80% loan to value) so you walk away with your cash. We then immediatly refiance that 221,250 loan amount to a long term fixed program as a rate/term refi. The key is that rate/term refi's do not have seasonsing periods to use the improved value. So, by doing this you have pulled your cash back out for the next project and have a long term fixed rate.
Hurst Real Estate, INC4.991 Reviews- I just want to pay $175k for the property, then get the $175k the day after I close. How do I make this happen?
Quote from @Jay Hurst:
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
$275-$295.
I wouldn't want a cash out refi. I just want an outright refi straight after purchase.
@V.G Jason Anytime you walk away with cash it is a "cash out refi" even if getting your own cash back. In your above scenario you go with delayed financing but you would be limted to what you purchased the property for plus closing costs/pre-paids or 75% loan to value what ever is lower. So, in assuming your 170k purchase price with a 295k value you can pull out the 170k cash you purchased the property for but not the cash you put in for rehab.
To do that what we do is a bridge loan out of our pocket so we make our rules. With a solid appraisal we do not have any seasoning requirement at all. We would lend up to 75% loan to value which would be 221,250 (sometimes we will go up to 80% loan to value) so you walk away with your cash. We then immediatly refiance that 221,250 loan amount to a long term fixed program as a rate/term refi. The key is that rate/term refi's do not have seasonsing periods to use the improved value. So, by doing this you have pulled your cash back out for the next project and have a long term fixed rate.
- 3yStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 513 votes
There are lenders that don't wait 6 months for seasoning to a DSCR loan if there was a rehab. Also, there are lenders that will do delayed financing if someone is only looking to get some of the cash back they put into the deal and not any rehab costs.
Bright Skyline518 Reviews Quote from @V.G Jason:
I just want to pay $175k for the property, then get the $175k the day after I close. How do I make this happen?Quote from @Jay Hurst:
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
$275-$295.
I wouldn't want a cash out refi. I just want an outright refi straight after purchase.
@V.G Jason Anytime you walk away with cash it is a "cash out refi" even if getting your own cash back. In your above scenario you go with delayed financing but you would be limted to what you purchased the property for plus closing costs/pre-paids or 75% loan to value what ever is lower. So, in assuming your 170k purchase price with a 295k value you can pull out the 170k cash you purchased the property for but not the cash you put in for rehab.
To do that what we do is a bridge loan out of our pocket so we make our rules. With a solid appraisal we do not have any seasoning requirement at all. We would lend up to 75% loan to value which would be 221,250 (sometimes we will go up to 80% loan to value) so you walk away with your cash. We then immediatly refiance that 221,250 loan amount to a long term fixed program as a rate/term refi. The key is that rate/term refi's do not have seasonsing periods to use the improved value. So, by doing this you have pulled your cash back out for the next project and have a long term fixed rate.
again, it goes back to what the property is worth. if it is worth 175k no one is going to give you 175k. What is the property worth the day after you close?
Hurst Real Estate, INC4.991 Reviews- $175k clearly.
Quote from @Jay Hurst:
Quote from @V.G Jason:
I just want to pay $175k for the property, then get the $175k the day after I close. How do I make this happen?Quote from @Jay Hurst:
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
$275-$295.
I wouldn't want a cash out refi. I just want an outright refi straight after purchase.
@V.G Jason Anytime you walk away with cash it is a "cash out refi" even if getting your own cash back. In your above scenario you go with delayed financing but you would be limted to what you purchased the property for plus closing costs/pre-paids or 75% loan to value what ever is lower. So, in assuming your 170k purchase price with a 295k value you can pull out the 170k cash you purchased the property for but not the cash you put in for rehab.
To do that what we do is a bridge loan out of our pocket so we make our rules. With a solid appraisal we do not have any seasoning requirement at all. We would lend up to 75% loan to value which would be 221,250 (sometimes we will go up to 80% loan to value) so you walk away with your cash. We then immediatly refiance that 221,250 loan amount to a long term fixed program as a rate/term refi. The key is that rate/term refi's do not have seasonsing periods to use the improved value. So, by doing this you have pulled your cash back out for the next project and have a long term fixed rate.
again, it goes back to what the property is worth. if it is worth 175k no one is going to give you 175k. What is the property worth the day after you close?
Quote from @V.G Jason:
$175k clearly.Quote from @Jay Hurst:
Quote from @V.G Jason:
I just want to pay $175k for the property, then get the $175k the day after I close. How do I make this happen?Quote from @Jay Hurst:
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
$275-$295.
I wouldn't want a cash out refi. I just want an outright refi straight after purchase.
@V.G Jason Anytime you walk away with cash it is a "cash out refi" even if getting your own cash back. In your above scenario you go with delayed financing but you would be limted to what you purchased the property for plus closing costs/pre-paids or 75% loan to value what ever is lower. So, in assuming your 170k purchase price with a 295k value you can pull out the 170k cash you purchased the property for but not the cash you put in for rehab.
To do that what we do is a bridge loan out of our pocket so we make our rules. With a solid appraisal we do not have any seasoning requirement at all. We would lend up to 75% loan to value which would be 221,250 (sometimes we will go up to 80% loan to value) so you walk away with your cash. We then immediatly refiance that 221,250 loan amount to a long term fixed program as a rate/term refi. The key is that rate/term refi's do not have seasonsing periods to use the improved value. So, by doing this you have pulled your cash back out for the next project and have a long term fixed rate.
again, it goes back to what the property is worth. if it is worth 175k no one is going to give you 175k. What is the property worth the day after you close?
The you clearly understand you are asking for a 100% mortgage right? You will not get that. And investors often are able to buy properties under market value, so it is not always a "clear" issue. if the house was worth 235k you could get back your 175k the next day. If the house is worth 175k you could get back 131,250 the next day.
Hurst Real Estate, INC4.991 ReviewsQuote from @Jay Hurst:
Quote from @V.G Jason:
$175k clearly.Quote from @Jay Hurst:
Quote from @V.G Jason:
I just want to pay $175k for the property, then get the $175k the day after I close. How do I make this happen?Quote from @Jay Hurst:
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
$275-$295.
I wouldn't want a cash out refi. I just want an outright refi straight after purchase.
@V.G Jason Anytime you walk away with cash it is a "cash out refi" even if getting your own cash back. In your above scenario you go with delayed financing but you would be limted to what you purchased the property for plus closing costs/pre-paids or 75% loan to value what ever is lower. So, in assuming your 170k purchase price with a 295k value you can pull out the 170k cash you purchased the property for but not the cash you put in for rehab.
To do that what we do is a bridge loan out of our pocket so we make our rules. With a solid appraisal we do not have any seasoning requirement at all. We would lend up to 75% loan to value which would be 221,250 (sometimes we will go up to 80% loan to value) so you walk away with your cash. We then immediatly refiance that 221,250 loan amount to a long term fixed program as a rate/term refi. The key is that rate/term refi's do not have seasonsing periods to use the improved value. So, by doing this you have pulled your cash back out for the next project and have a long term fixed rate.
again, it goes back to what the property is worth. if it is worth 175k no one is going to give you 175k. What is the property worth the day after you close?
The you clearly understand you are asking for a 100% mortgage right? You will not get that. And investors often are able to buy properties under market value, so it is not always a "clear" issue. if the house was worth 235k you could get back your 175k the next day. If the house is worth 175k you could get back 131,250 the next day.
I'm not asking for a 100% cash out, I know normal 75-80% LTV. I want that right after I close. My OTP will be 20-25% essentially.
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
$175k clearly.Quote from @Jay Hurst:
Quote from @V.G Jason:
I just want to pay $175k for the property, then get the $175k the day after I close. How do I make this happen?Quote from @Jay Hurst:
Quote from @V.G Jason:
Quote from @Jay Hurst:
Quote from @V.G Jason:
Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?
There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.
@V.G Jason In your above scenario what would the property appraise for after rehab?
$275-$295.
I wouldn't want a cash out refi. I just want an outright refi straight after purchase.
@V.G Jason Anytime you walk away with cash it is a "cash out refi" even if getting your own cash back. In your above scenario you go with delayed financing but you would be limted to what you purchased the property for plus closing costs/pre-paids or 75% loan to value what ever is lower. So, in assuming your 170k purchase price with a 295k value you can pull out the 170k cash you purchased the property for but not the cash you put in for rehab.
To do that what we do is a bridge loan out of our pocket so we make our rules. With a solid appraisal we do not have any seasoning requirement at all. We would lend up to 75% loan to value which would be 221,250 (sometimes we will go up to 80% loan to value) so you walk away with your cash. We then immediatly refiance that 221,250 loan amount to a long term fixed program as a rate/term refi. The key is that rate/term refi's do not have seasonsing periods to use the improved value. So, by doing this you have pulled your cash back out for the next project and have a long term fixed rate.
again, it goes back to what the property is worth. if it is worth 175k no one is going to give you 175k. What is the property worth the day after you close?
The you clearly understand you are asking for a 100% mortgage right? You will not get that. And investors often are able to buy properties under market value, so it is not always a "clear" issue. if the house was worth 235k you could get back your 175k the next day. If the house is worth 175k you could get back 131,250 the next day.
I'm not asking for a 100% cash out, I know normal 75-80% LTV. I want that right after I close. My OTP will be 20-25% essentially.
Then you can do the delayed fiancing which as I put in several post above.
"If the house is worth 175k you could get back 131,250 the next day." That is 75% of the value of the house. Clear?Hurst Real Estate, INC4.991 Reviews
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