BRRRR - Delayed Financing vs. Cash Out Refi
I'm analyzing my first BRRRR project. I found a bank here in town that will do a variety of portfolio loans. I was explaining the project and asked how soon I could get my cash back out assuming I had more than 25% of final ARV. She said delayed financing and cash out refi were basically the same and I had to wait six months. It's not a deal breaker, but I would rather have my cash back out immediately if that's an option. From the podcasts I've heard and the posts I've read, I'm assuming that is an option. Can someone help me out here? Or at least explain the pros and cons of each? Thanks much.
Most Popular Reply
delayed finance is a bit of a niche product so finding lenders that don't know how to use it is common
delayed finance will remove the seasoning period BUT you have to pay CASH for the property (borrowed capital will not work), if you have this option you can also roll insurance and rehab expenses onto the HUD-1 if you're willing to pay it all up front. If you then create 25% equity, so your all-in cost is 75% LTV you can extract 100% of your funds with no seasoning. The devil is in the details here
6 month seasoning BRRRR is far easier and allows for a lot more options but......gotta wait 6 months lol
your local portfolio lender may have options in between these 2 approaches.