Same-Day Refinance to Pull Out HELOC

[Tyler D.]

Hey folks! I'm gearing up to purchase a four-plex in my area for $192,000 with a conventional loan with 25% down and 5.25% int. This is a serious value-add property and plan to BRRRR it. Unfortunately, I don't have the cash for the down payment, so I am using a HELOC for that. My mother is lending me the HELOC and I want to refinance her funds out ASAP, so I was wondering if a same-day refinance was a thing. My lender told me that there isn't a required holding time for the prop. Can I purchase the property and refinance it immediately after closing to get her funds out?

I want to avoid purchasing the property on low down FHA because taxes, insurance, debt pay-down and private mortgage insurance is too high to hold property at current rents (negative cash flow).

[Zack Karp]

@Tyler D.

In order to take cash out in your scenario, you will need to own it for 6 months to cash out based at the new ARV. The max LTV on a 4-unit Conventional cash out refi is 75% if you are living there (primary), and 70% if you are not (investment).

The lender who told you that there is no waiting to cash out is a fool.  There is no waiting on a rate/term refi, but that's not what you need here.  And there is delayed financing, that's when you purchase with cash and you can cash out right away, but not to exceed your purchase price, so again that's not what you are doing here.

It makes my skin crawl when investors work with crappy loan officers that don't understand REI and get crappy advice. Make sure you are working with a lender that knows their stuff and can help you see 2,3,4 moves ahead so you don't get stuck. I'm not in Idaho, but if you want a referral to a rockstar lender that can help you there, let me know.

Best of luck!