Clarification on Financing with OPM

[Jayagowri Deenadayalan]

Hi, 

  Lets assume i buy a house and rehab it with private investor money. How can i refinance the property? What is the traditional seasoning period? Also when i refinance since i am using OPM is that going to be an issue? Can you guys please share your experience? I am trying to rehab a property with money borrowed from my friend. I need to know exit strategy. Appreciate the help.

Thanks

Gowri

[Ashley Pimsner]

I don't want to sound harsh but you should have had an exit strategy in place before taking on the rehab. That being said a portfolio loan from a local community bank is your best bet if you can't qualify for a conventional loan based on your income. Typically a portfolio lender will require a 1.2 DCR which is the debt coverage ratio and between 65 and 70% ARV which is after repair value. Many banks require a one-year seasoning period after rehab. With the portfolio lender, since they hold the loan on their books and do not sell it you might have some wiggle room on a case by case basis. Best of luck