BRRRR Question: When Can I Refinance?

6 Replies

If I purchase a house with cash, how soon would a bank allow me to do a cash out I''ve been told six months, but I"m hoping this is not the case. 

6 months is very standard when using fannie/freddie loans

you can do less if you find a local lender who likes what you're doing, but it's not super common. 

there are exceptions like delayed finance but they come with some significant restrictions. 

Whats' the problem with 6 months? how fast are your rehabs/tenant placement/loan underwriting now? How much are you going to shave off from the normal process?

@Joseph Duenas

If you pay cash you can cash out prior to 6 months with delayed financing. You are limited to a maximum of your initial investment with the purchase, prior to 6 months. You are able to do the same LTV of 75% for a singe family and 70% for a multi-family property. There are ways of structuring the deal to max out on your initial investment, but Fannie Mae is putting restrictions on these.

@Alexander Felice Thanks for the response. To answer you question, on what's the problem with six months, I'm just looking at the fastest way to purchase an asset, refinance it at a low rate, and deploy the  cash again. Six months is  a long wait, especially if new deals come along.  How does "delayed finance" work?  

Velocity of money. I get it. Same principal as the flip concept. Keep your cash deployed and working.

@Joseph Duenas delayed financing is a "conventional" loan that allows people that have purchased a property with either cash, an unsecured loan, or a HELOC secured by their primary property, to finance a cash out sooner than 6 months.

Based on delayed financing you would only be able to recoup what you initially purchased your property for based on you HUD/settlement statement up to 75% LTV.

The only thing with this type of loan is DTI is taken into account and you will have to provide full income documentation.