Is it possible to do this?
Example- Buy a house for $40k. Cost 10k to fix it up, then house appraises for $90k. If you put down 20% on the original loan, then you have a loan amount for $30k on a house worth $90k. Can you refiance is or take a heloc on the ARV of the house?
Wait a year and you can refi using a new appraisal. You'll need to meet other qualifications.
Yes, it's possible and like Jon said you need to hold it for 12 months
. . . just to chime in, depending on the lender you are using, you CAN refi as soon as the rehab has been completed.
The problem is that most lenders have fannie mae overlays that require seasoning. That being said, not all lenders have these overlays. I have found two lenders who do not require any seasoning on the property before you refi at ARV.
My advice would be to check with lenders in your market before deciding on how to proceed. Implementing the strategy you laid out is a great way to grow your business quickly. The trick is finding the right lender and then being able to qualify for the loans. The more fannie mae loans you get the harder it is to get funding, especially if you have more than 4 loans.
I hope that helps!
Don't give up after talking to one or two lenders, either. You may have to talk to a dozen or more banks to find loans that meet your needs. A mortgage broker who really understands investor lending can be a big help, too.
The FDIC Institution Directory can be handy, too. Look for smaller banks in your area that show real estate loans on their books.
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