Financing To Keep Moving While Waiting For Seasoning Periods

Jay HurstBusiness Member

Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes

3y

Quote from @Darrell Essex:

Hello all,

so I'm a couple BRRRRs with a lease options in and the issue I'm having is Fannie Mae and Freddie Mac both need a 12 month seasoning period and so-far all the DSCR 30 yr I've found do 6-12 months seasoning. I've gotten both my houses rehabbed and rented in 2 months leaving me and my contractors waiting 4 months for the next project since I'm waiting to cash out to get the initial down payment back. Just need an infusion of cash to fund rehab costs while my initial funds are locked in equity until seasoning is done. I'd be able to acquire fix and flip loans from the money I used to rehab previous properties from the fix and flip loan reimbursements. Does anyone have a solution on a type of line of credit that's not a heloc, or a dscr cash out refinance that is maybe 3 months seasoning so I can keep the train moving in the express lane instead of making a ton of stops. I looked into small business lines of credit today but they will lend 10-15% of annual revenue which where I'm at now is only 68k so obviously I can't do much with a 6k line of credit to fund some rehab phases. Just trying to see if anyone has any creative options I haven't heard of yet. Can't find out what's out there if you don't ask for solutions to problems lol.

We do have a double close product to get around Fannie/Freddie 12 month seasoning. The upshot is that the seasoning period is ONLY for cash out loans NOT rate/term. So, we do a cash out loan with our own funds so you get your funds, then turn around in 30-45 days to complete the rate/term refi into the conventional loan.

Hurst Real Estate, INC4.989 Reviews

OP

Chicago, IL · Member since 2016 · 27 posts · 11 votes

3y

Quote from @Erik Estrada:

I am a little confused on your paragraph.

But on a DSCR loan if you are not looking to take any cash out, (only pay off fix and flip loan) There is no seasoning requirement.

You may also do a delayed purchase refi, and can do 75% of the PP, Rehab, and Closing Costs. no seasoning requirement on that as well

I’m looking for cash out refi. Rate and term will only get me my initial loan back not my equity that I need back to get to the next project. I have a loan of 108k and 30k of my own funds in the house. Trying to get the 30k back not just switch the 108 from 12 to 360 months. The rehab funds I used that I can get back from the fix and flip loan draws I can buy the next project but I need that other 30 that’s in equity on the loan that’s being seasoned I need to fund the next projects rehab.

OP

Chicago, IL · Member since 2016 · 27 posts · 11 votes

3y

I’m still new and I kind of understand what you are saying but not fully. Not sure I understand the turn around in 30-45 days to complete the rate/term refi into the conventional loan.

I am understanding it as you give me the cash out portion and then refinance the whole thing in 30-45 days. Is that correct?

Veronica Grimes

Investor · NC · Member since 2017 · 5 posts · 2 votes

3y

Hey Darrell. I don't believe there is a 6 month seasoning period with my referral partners. I will send you a direct message but also verify with them that it's the case.

OP

Chicago, IL · Member since 2016 · 27 posts · 11 votes

3y

Quote from @Veronica Grimes:

Hey Darrell. I don't believe there is a 6 month seasoning period with my referral partners. I will send you a direct message but also verify with them that it's the case.

Great thank you

Jay HurstBusiness Member

Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes

3y

Quote from @Darrell Essex:

I’m still new and I kind of understand what you are saying but not fully. Not sure I understand the turn around in 30-45 days to complete the rate/term refi into the conventional loan.

I am understanding it as you give me the cash out portion and then refinance the whole thing in 30-45 days. Is that correct?

yes, we do the cash out loan with our funds. (our money, our rules) then turn around and refi that cash out loan into a rate/term conv 30 yr fixed using the same appraisal within 30-45 days.

Hurst Real Estate, INC4.989 Reviews

OP

Chicago, IL · Member since 2016 · 27 posts · 11 votes

3y

Quote from @Jay Hurst:

Quote from @Darrell Essex:

I’m still new and I kind of understand what you are saying but not fully. Not sure I understand the turn around in 30-45 days to complete the rate/term refi into the conventional loan.

I am understanding it as you give me the cash out portion and then refinance the whole thing in 30-45 days. Is that correct?

yes, we do the cash out loan with our funds. (our money, our rules) then turn around and refi that cash out loan into a rate/term conv 30 yr fixed using the same appraisal within 30-45 days.

I sent an inquiry through your website.

Brian G.

Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes

3y

@Jay Hurst can you please illustrate with an example with numbers/$$$ ? Thanks!

Jay HurstBusiness Member

Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes

3y

Quote from @Brian G.:

@Jay Hurst can you please illustrate with an example with numbers/$$$ ? Thanks!

@Brian G. Sure, you buy a property for 100k, put in 25k, now it is worth 200k. We will (in the states we lend in) give you a cash out for 75% of the improved value of 200k which is 150k loan without a waiting period. We then use the same appraisal to refi that 150k bridge loan into a conventional loan with no additional cash out.

Hurst Real Estate, INC4.989 Reviews

2 Reply

Nick BelskyBusiness Member

Residential and Commercial Broker · Member since 2021 · 1k+ posts · 704 votes

3y

@Darrell Essex

Tough spot. Honestly, this is a prime reason so many don't use Fannie/Freddie for purchase loans if doing rehab... Most will use the fix and flip to put less down and have their rehab costs financed so they stay more liquid. Once completed, they either sell for profit or cash out refinance to hold long term. This way they recoup most of, if not excess, of their initial investment as well. You can refi to perm via Conventional (must first QCD to your personal name)with a rate and term or DSCR (can stay in entity) with a cash out. As you noted, conventional is 12 months seasoning to cash out. DSCR cash outs can be in as little as 3 months; most are 6 months, and a few are 12 months.

Working through your financial planning prior to diving in could have helped prevent the situation you are in now. Always plan with the end in mind. Since you appear to not be wanting to use HELOC or Cash Outs, cross collateralizing may be the only way to keep your business running. I work with a few lenders who will cross collateralize, but they also have seasoning requirements to cross them.

Cheers!

[email protected]

Belsky Mortgage, LLC527 Reviews

Account Closed

Lender · Columbus, OH · Member since 2023 · 56 posts · 25 votes

3y

Quote from @Darrell Essex:

Hello all,

so I'm a couple BRRRRs with a lease options in and the issue I'm having is Fannie Mae and Freddie Mac both need a 12 month seasoning period and so-far all the DSCR 30 yr I've found do 6-12 months seasoning. I've gotten both my houses rehabbed and rented in 2 months leaving me and my contractors waiting 4 months for the next project since I'm waiting to cash out to get the initial down payment back. Just need an infusion of cash to fund rehab costs while my initial funds are locked in equity until seasoning is done. I'd be able to acquire fix and flip loans from the money I used to rehab previous properties from the fix and flip loan reimbursements. Does anyone have a solution on a type of line of credit that's not a heloc, or a dscr cash out refinance that is maybe 3 months seasoning so I can keep the train moving in the express lane instead of making a ton of stops. I looked into small business lines of credit today but they will lend 10-15% of annual revenue which where I'm at now is only 68k so obviously I can't do much with a 6k line of credit to fund some rehab phases. Just trying to see if anyone has any creative options I haven't heard of yet. Can't find out what's out there if you don't ask for solutions to problems lol.

Hi Darrell:

There are several options for a cash out refi on a DSCR loan with 3 months seasoning, usually you can borrow 75% of the ARV. I sent you a message, feel free to reach out anytime

Brian G.

Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes

3y

@Jay Hurst in your example are most people buying the $100k property and investing the $25k with HML and/or cash? You aren't financing the initial acquisition/rehab correct?

[email protected]818-770-0340

Stacy RaskinBusiness Member

Lender · Member since 2022 · 1k+ posts · 500 votes

3y

There are lenders that have 0 waiting period for seasoning to get your purchase price and cash paid for improvements. Some lenders will do new appraised value with 0 waiting period if can show that substantial improvements have been made.

Bright Skyline518 Reviews

Kerry BairdPro Member

Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes

3y

Look at Mofin for fix and flip products, as well as DSCR mortgage to have another option.

Jay HurstBusiness Member

Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes

3y

Quote from @Brian G.:

@Jay Hurst in your example are most people buying the $100k property and investing the $25k with HML and/or cash? You aren't financing the initial acquisition/rehab correct?

@Brian G. Either cash or HML. and we do finance the HML as well but only in Texas.

Hurst Real Estate, INC4.989 Reviews

2 Reply

OP

Chicago, IL · Member since 2016 · 27 posts · 11 votes

3y

Quote from @Nick Belsky:

@Darrell Essex

Tough spot. Honestly, this is a prime reason so many don't use Fannie/Freddie for purchase loans if doing rehab... Most will use the fix and flip to put less down and have their rehab costs financed so they stay more liquid. Once completed, they either sell for profit or cash out refinance to hold long term. This way they recoup most of, if not excess, of their initial investment as well. You can refi to perm via Conventional (must first QCD to your personal name)with a rate and term or DSCR (can stay in entity) with a cash out. As you noted, conventional is 12 months seasoning to cash out. DSCR cash outs can be in as little as 3 months; most are 6 months, and a few are 12 months.

Working through your financial planning prior to diving in could have helped prevent the situation you are in now. Always plan with the end in mind. Since you appear to not be wanting to use HELOC or Cash Outs, cross collateralizing may be the only way to keep your business running. I work with a few lenders who will cross collateralize, but they also have seasoning requirements to cross them.

Cheers!

You just literally said what I said lol. Problem is I start the project the rules are 1 way I finish and the rules changed. My problem is finding the 3 month after the rules changed. I find 6 and 12 no problem it’s the 3 month I’m having difficulty finding.