Taking Advantage of Rehab Costs With Delayed Financing!

[Jerry Padilla]

Want to move faster with your cash out refinance on an investment property with conventional financing (Delayed Financing)?

The typical waiting period for a cash out is 6 months.

You can do sooner with delayed financing if you paid cash - with the restriction of pulling out a max of the purchase price plus closing costs prior to 6 months. Delayed financing you still go according to the current appraised value of the property.

Now, Here is the Catch!

If you include on your closing statements (which vary state to state - HUD-1/ALTA statement ) the renovation costs - and have them charged at closing...... This renovation cost now becomes an initial closing cost and can be included with the max that you are able to pull out prior to 6 months.

With this scenerio, Here is a quick example:

Purchase price: $100k

Closing costs: $5k

Renovation Money Escrowed: $45k

3 months the job is completed and you are now ready to refinance and get your money back.

New appraisal comes in at $200k

Your all in for $150k at closing.

For a SFR at an LTV of 75% you can cash out the full amount of $150k

For a MFR at an LTV of 70% you can cash out $140k

In this scenerio, if you paid cash, you could now recoup your investment for the same amount of cash as you would have, if it would have been after 6 months since you weren't limited to the $105k if the renovation money wasn't escrowed.

Now let's say the property was valued at $300k

You will still only be able to pull out a max of $150k as that is your initial investment. So at this point you would want to wait until the 6 month mark to cash out more of your investment. The good news is, you already started the process and can cash out at 6 months and 1 day!

Here is a post with more info. on Delayed Financing;

https://www.biggerpockets.com/member-blogs/5110/46871-buy-rent-rehab-refinance-cash-out-refinance-delayed-financing

Feel Free to Message Me With All Your Financing Questions and Needs!