Which route to go for refi?

Question

Greetings all,

I have recently purchased (and am in the process of rehabbing) 2 properties for buy and hold out of my home state. One is a 2/1 and the other a duplex (also 2/1's) Both were purchased with cash at 75-80% of the ARV. Both should cashflow nicely once tenants are placed and after the rehabs are done (this month). My question now is regarding the refinancing. Should I try to refi these together? Should I wait 6 months to season or is it better to get the deal done sooner than later? Would I qualify for a portfolio loan?  ( These are rental properties #'s 3&4 for me) Should I try for a Fannie Mae conventional on one (for the low interest rate and then go bank loan on the duplex?

Interested to hear what some of you all might to do pull your cash out in this scenario... Thanks for the help..

Tom C

Tom Camarda · Answer

Thanks everybody. It's a little tricky, Fannie Mae wants to see 6 months of reserves for EACH property in the portfolio. Not a problem now but around prop 6 or 7 it might be... That said, delayed financing through FM is probably the route to go, since although I won't be getting 75% of the ARV, I will still be getting a low interest rate and the props will still cashflow...

TC

Justin R. · Answer

If you purchase a property for $200k cash and put $90k into a three month rehab, you can use delayed financing under current Fannie Mae criteria to take out a first loan for $200k.

At least, that's what I did on a property in June of this year.

@Upen Patel -- Is that what you're describing?  The "new appraisal" part of what you said sounds like it doesn't match what I said.

Upen Patel · Answer

Delayed financing is the best option, if you don't need rehab and a higher valuation after the rehab. If you need rehab, then you have to wait for 6 months to get a new appraisal. Delayed financing is no longer an option after 6 months.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

Josh Autery · Answer

I think most people wait the six months to 'season' for the banks sake, not their own.  I would refi asap so you can reinvest that money elsewhere!

As for how... if you never plan on divesting the properties, then a blanket loan from a credit union would be my choice. If you think you want to get rid of one eventually, it may make that a process a little more intricate.

Joshua Diaz · Answer

Hey there. Responding because I would also be curious on good ways to go about this.  I haven't done a refinance but the actual loan you would get in the refinance is based on the ARV right?

It might be a good idea to consider the area (if you haven't already) as far as home appreciation goes.  If it is on he rise then maybe waiting those 6 months would be best.

Sorry I couldn't provide more help and I wish you the best of luck in this situation.