Cash out on a fix and hold property in less than 6 months

9 Replies

I am looking for an advice.I am planning to purchase a fixer upper in SFO bay area for $460k SFH. The comps in that area are going at $560K . What would be good strategy on this property.

1) Buy this property at $460 K  with conventional mortgage and spend 25k in rehab before renting this out .

2) Buy this property at $460 K all cash , rehab and rent it out and then get cash out on the property 2 months at appraise value of $560k after the purchase to get the max ROI.

If I go with option 2 is there any lender who can refinance a property 2 month after the purchase?Will the lender take $560 k value of house or $460K? Based on my understanding the lender takes lower of market value and purchase price if you refinance the property before 6 months of purchase ? Please share your feedback.

@Sameer Jain

Many lenders are competing with one another over their cash out refi seasoning guidelines. Many will do them right away but restrict the loan to be based off of the purchase price + rehab costs rather than the appraised value until either a 6 or 12 month seasoning period.  However, a few are coming out and going off of appraised value much sooner (2-3 months) as long as the person on title remains the same.  

Yes  I will PM it is hold with comps going at 100 k more than the acquisition cost .