Interested in hearing about a personal experience related to delayed financing, where an investor teamed up with a bank to pull money out in a relatively short period of time in order to reinvest equity in another property without the 1-2 year seasoning. Open to anyone’s experience/advice, thanks Gang!
Here's some I learned and intend to implement:
Create an LLC and have the LLC lend you a mortgage on the property you arereceiving.The reason why this works is because instead of you needing cash or receiving a cash out loan, we are now refinancing a loan – your loan. There no reason to wait any time or have any "whichever is lower" rule come into play. We are just refinancing a loan.Here's how it works:You create an LLCYou buy a homeYour LLC gives you a loan for the homeYou file the deed for that loan at the county courthouseYou use the money from the LLC to buy and fix up the propertyOnce the property is completed, your conventional lender comes to refinance the loan Your conventional lender runs title and sees there is a loan.Your conventional lender refinances you into a new loan, and cuts a check to your LLC in the amount of 75% of the value.Please don't confuse this 75% with a "cash out" amount. The non-cash out LTV on a refinance is also 75%. We are refinancing a mortgage. Your LLC's mortgage. Essentially your LLC has become the bank/hard money lender/etc. However you want to think about it. You get to set the interest rate (it can be 0%) and you get your investment amount back sooner.Some things to think of:To file a deed at the county courthouse is $100-$150 in cost (depending on which county)And you want that note to be pretty close to 70% of the ARV for the property if you don't want to bring any money to closing. 70% will allow you to roll in your closing costs. If you want it to be at 75% just keep in mind you would need to bring your closing costs out of your pocket to complete the refinance.
The expert is a guy named @Andrew Postell
Hope this helps...
As long as you pay cash for the property, delayed financing is pretty simple and straight forward. And if you are purchasing in your own name, you can still obtain a conventional mortgage. I would simply call around and find a bank/broker that has experience with delayed financing. If you are purchasing with an LLC, or are using borrowed money to make the original purchase, it gets a little trickier because it won't be conventional, but can still be done.
We’ve done it both ways, and though I am certainly not an expert, I’d be happy to answer any questions that I can about the process we went through!
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