Oceanside, CA · Member since 2015 · 32 posts · 18 votes
So in David Green's book "BRRRR" he mentions that banks will let you refi after 4-6 months. I have seen lenders that do the 6 mo refi, but haven't seen the 4 month at all. I am prepared to keep reaching out to as many as I need to, but I just wanted to see if anyone else has been able to refi at 4 months. thanks.
So in David Green's book "BRRRR" he mentions that banks will let you refi after 4-6 months. I have seen lenders that do the 6 mo refi, but haven't seen the 4 month at all. I am prepared to keep reaching out to as many as I need to, but I just wanted to see if anyone else has been able to refi at 4 months. thanks.
If you want the Fannie Mae subsidy for your interest rate and fees, you have to play by her rules. For a cash out refinance using the new ARV (but not other refinances), 6 months on title is the general requirement.
In practice, I've yet to meet a first timer pull the rehab portion of a BRRRR off in less than six months anyways. In all probability this isn't what you should be worried about. Worry not, on your first BRRRR the contractor delays will push it past six months (you got 3 bids and picked the cheapest, didn't ya?), and contractor cost overruns (yeah, about the credibility of that cheapest bid...) will ensure it's over budget to boot. :)
Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
7y
@Jaysen Medhurst
I've refinanced in literally 2 weeks since the property was deeded in my name. Call small local community banks. The larger ones are usually a waste of time.
So in David Green's book "BRRRR" he mentions that banks will let you refi after 4-6 months. I have seen lenders that do the 6 mo refi, but haven't seen the 4 month at all. I am prepared to keep reaching out to as many as I need to, but I just wanted to see if anyone else has been able to refi at 4 months. thanks.
If you want the Fannie Mae subsidy for your interest rate and fees, you have to play by her rules. For a cash out refinance using the new ARV (but not other refinances), 6 months on title is the general requirement.
In practice, I've yet to meet a first timer pull the rehab portion of a BRRRR off in less than six months anyways. In all probability this isn't what you should be worried about. Worry not, on your first BRRRR the contractor delays will push it past six months (you got 3 bids and picked the cheapest, didn't ya?), and contractor cost overruns (yeah, about the credibility of that cheapest bid...) will ensure it's over budget to boot. :)
Investor · Saint Louis, MO · Member since 2019 · 146 posts · 66 votes
7y
@Chris Mason I called 20 smaller banks ion my surrounding area and found 2 that would work with investors, refi and keep in the LLC name, but no earlier than 12 months.
If you refinance with a commercial loan there is no seasoning. Conduct your rehab, find a tenant and refinance. Since you mentioned an LLC you will need commercial financing anyway.
Rental Property Investor · DFW · Member since 2017 · 143 posts · 120 votes
7y
@Carl Mccrory, if the purchase transaction satisfies Fannie's Delayed Financing Exception, you can CO-refi anytime. Any lender who writes conforming loans should be able to handle these.
The downside is that rehab investment $ will be parked as equity until you do a seasoned CO-refi, non-conforming CO-refi, or sell.
Lender · Springfield, MO · Member since 2015 · 379 posts · 180 votes
7y
@Carl Mccrory, as @Chris Mason said, if you are ONLY looking at a Fannie loan, then you have to play by those rules. I work with private institutional lenders. I would say at least half of my clients are utilizing the BRRR strategy and we are regularly refinancing at full value at the 90-day mark.
I have found that when an investor is trying to use a loan product for something that it is not designed to do, and they are dead set on using that loan product, then the investor ends up doing things in the project that the project was not originally designed to do.
Thanks everybody for the replies and info. Good to know there are more options available.
Just to chime in, there are various levels of lending with Fannie Mae/Freddie Mac at the top. Those loans have very specific requirements, full income documentation, seasoning on title and myriad other guidelines. Because the risk is lower (because the borrower met all the guidelines), the rate and cost is lower.
The next level would be portfolio lenders. Still institutional, but with relaxed guidelines (no income verification, reduced seasoning to use the appraised value among others) the rate and cost is higher.
Still another level lower would be private lenders. It's a guy with some money to lend. Typically very reduced requirements and a higher rate of interest and fees.
Rental Property Investor · Atlanta · Member since 2019 · 1 post · 0 votes
7y
Carl,
As a long time Loan Officer, the guideline is 6 months. Obviously, the market is fluid but that is the solicitation rule and the buy back benchmark also.
Fleetwood, PA · Member since 2018 · 15 posts · 8 votes
7y
@Carl Mccrory
Sun Federal Credit Union near me has no seasoning period. I can refi as soon as I am ready. It took over a dozen calls to small local banks to find them. There are small portfolio lenders who can make their own rules but they wont be easy to find!
Rental Property Investor · Athens, GA · Member since 2016 · 47 posts · 13 votes
7y
@Stephanie P We have 2 MF properties, both via local portfolio loans with small hometown bank. Had to jump through all the same hoops, DTI / income verification/IRS transcripts...only difference was they actually loaned to us (my husband had a foreclosure in 2014) I guess the rigors of the loan process depends on the bank itself. We plan to refinance both properties soon after we build up our reserves in the business account. We also were asked to open an account with them ..which we happily obliged.
@Eric Nguyen I’m interested in gaining a private lender connection. I have hard money available at decent rates locally, however private money is needed for projects, as well.
@Stephanie P We have 2 MF properties, both via local portfolio loans with small hometown bank. Had to jump through all the same hoops, DTI / income verification/IRS transcripts...only difference was they actually loaned to us (my husband had a foreclosure in 2014) I guess the rigors of the loan process depends on the bank itself. We plan to refinance both properties soon after we build up our reserves in the business account. We also were asked to open an account with them ..which we happily obliged.
The rigors depend on the level of risk to the lender. Low risk = lots of documentation and subsequently low cost. Higher risk = minimal documentation and subsequently higher cost (and everything in between).