Delayed Financing in Houston, TX

2 Replies

Hello BP community,

I am ready to make a cash offer on a major rehab property and plan to utilize the delayed financing exemption to get my capital back out (sales price, closing costs, and rehab). I am hearing conflicting things from the forums regarding this as there are lenders that have commented that you can only cash out the purchase price plus closing costs (no rehab) or 70% of the appraised value, whichever is LOWER. However, those who have done it has said that they were able to cash out at 70% of appraised value on rehab projects. I am leaning towards those who have done it, since it sounds more plausible. I'd like to hear more from those who have used the exemption strategy.

I approached several of the big banks in town to ask about the delayed financing exemption and they all look at me as if I am speaking a foreign language. They all try to push me back to a HELOC on my primary residence to fund the project. I have seen comments suggesting to reach out to small local lenders who specialize in working with investors for this, but I do not know who they would be. Can fellow BPers refer me to some Houston area lenders that I can contact?

One more thing...my partner and I have an LLC and the funds to take on the project, but do not have the W2 income to support the financing option. I do have someone in mind to help with this. Does this person needed to be added to the LLC as well, if we are to purchase the property under the LLC and delay finance afterwards?

Thank you in advance for your inputs!

@Minh Le Delayed refi is based ONLY on the purchase price. You will not be able to get any of the rehab out. If you want to do that, then you have to let the purchase season for at least 6 months.

Minh,

Upen is 100% correct.  In addition to his comments, it doesn't sound like you would qualify from a debt to income perspective, which is going to come into play with delayed financing.  That said, your next best option is to do a portfolio loan whereas qualifying is based on cash flow of the property, credit score and loan to value. You should be able to cash out up to 75% of fair market value in less than 6 months, as well. Some portfolio lenders allow this once rehab is complete and a tenant placed.