Refinancing out of Investment Property

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Refinancing out of Investment Property

Kyler J Sloan
Investor · Maggie Valley, NC · Member since 2020 · 284 posts · 85 votes

I have a house I would like to buy for now as an investment property.

However, I would like to convert a shed that is sitting on the place into an ADU and live some distance away from the house.

Could I potentially refinance the property as a primary residence?

20% is required for the investment property and 5% for a primary. So, I should be able to cash out that 15%, plus any appreciated value. 

Thanks in advance. 

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  • Melissa HartvigsenBusiness Member
    Real Estate Agent · Beaverton, OR · Member since 2020 · 190 posts · 158 votes
    3y

    @Kyler J Sloan

    If you purchase the property as an investment with 20% down, you won’t be able to pull out 15% later.  Most lenders have a maximum loan to value of 65%, though I have seen a few go up to 75% for a cash out refinance.

    To have the lender consider the home a primary residence for a refinance once it has been established as an investment property, you would have to live in it as your primary residence for a significant period of time (likely a year, possibly two). You should confirm this with the lender in advance so you know how long you have to wait.

    Maybe you should consider purchasing the property as a primary residence with 5% down? The interest rate on the mortgage will likely be a full percent lower than the investment loan. You could use the remaining 15% to fund your ADU build.

    Best wishes,

    Melissa 

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