Refi Seasoning - Multi Family?

Question

Are the refinance seasoning requirements the same for a small multifamily property as they seem to be for residential, ie 6-12 months?

I'm making an offer on a small multifamily non performing note and will negotiate with the seller to transfer title in lieu of chasing the deficiency, or worst case just foreclose.

My question is will I be able to do a cash out refi in this situation or will I still need to wait the full term?  Would a local bank or credit union waive this requirements since they're lending their own money?

Larry K. · Answer

I am about to close on a refi on a 2 family.  Tenants were in for about 2 months when I started the process.  Seasoning was not an issue.

Taking the advice of others on BP, I went with a community bank.

75 LTV.

Steve K · Answer

A quick call to some local banks and it seems like 45-60 days is doable in this situation.  Good news.  Now I just have to get the seller to agree to my offer.

Gary Parker · Answer

Do you mind emailing me the name of the credit union?  I am going to start holding to a few properties...I hope :-)  I cant rehab forever.

Nathan Emmert · Answer

Gary Parker btw, this is the same credit union that lets me do 100% financing... I like them :)  Actually walked out of closing with an IOU for $3,600+ on one deal... and a triplex with $32,000 of equity :)

Nathan Emmert · Answer

Gary Parker they did not question the purchase price... I bought at about 75% of appraised value and put $10k in and assumed his HML.  70% Loan to Appraisal allowed me to refi the HML including closing costs except for 400 odd dollars.  I "bought" $40k in equity in that 4plex, got in it for less than 10% down :)

Steve K I'm not a fix and flipper so I don't generally have the equity to worry about cash outs.  I have some extra equity in my first duplex as I bought it with 25% down and it appraised for 20% more than I paid for it that I may try to pull out when I refi to conventional but it's not a huge concern for me.  My primary focus is buying equity to minimize the cash I need to put in to refi at 70 - 75% LTV for 30 years fixed at conventional rates.  I want 19 mortgages for as little cash investment as I can make.

Gary Parker · Answer

Nathan Emmert the credit union did not question the purchase price?  I am assuming by your numbers above that you either did some improvements to increase value or bought 30% under value.

Steve K · Answer

Thanks Nathan Emmert  - have you done any cash out refi's lately?  If so did the banks give you grief about every little property detail?

Leaving the cash in the project still wouldn't be a bad return, but it's much prettier to cash out 60% and have no money in the deal with an income stream and a 40% equity stake.

Nathan Emmert · Answer

I did a refi with a credit union within 45 days of buying a property subject to... they can do about anything they want.  Mine went to 70% Loan to Appraisal which meant I needed to bring about $470 to closing.

Cash out refi's are far stickier, everyone gets nervous with those... both in terms of seasoning needs and LTVs.