Have I hit a wall or do I need to keep looking?

[Patrick Cruse]

I just got an offer accepted on a HUD house for the purchase price of $20,700. I estimate the rehabs at $25,000. I think the ARV will be $58,000. I planned to rent it out and do a cashout re-finance once it was rented out. I was planning on doing a 75% cash out for around $43,500, which would leave me coming out of pocket for approximately $2,500.

I have read that I should plan on shopping around for local banks that work with investors. I also read that I can expect to get rejected a lot in the process of finding one that will work with me.

At first, I thought my biggest hurdle would be to find a bank that didn't require a 6 month seasoning before doing my cashout re-fi. I thought that once the 6 month period was passed I would be able to find lots of banks that would work with me. 

I found a lender on my local CIREIA page that works with investors. I asked her about the seasoning period and she said they make loans without that waiting period. However, when I called her with the details of my house and what type of loan I wanted she basically told me that was impossible because of the Dodd-Frank law and the price of my house. She said they can only do a cash-out re-fi on a loan amount for greater than $50,000 and possibly $60,000 if it was an investment home. It had something to do with the APR not being allowed to be greater than 3% (I was confused about this part).

If this is true it will throw a major wrench into my plans to be buying houses in this price range to do the BRRRR strategy on. Is it true that it is impossible to do cash-out re-finance loans on loans for less than $50,000 or do I need to just keep shopping lenders?