No seasoning refinance on a cash property

BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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No seasoning refinance on a cash property

Axel Scaggs
Investor · Denton, TX · Member since 2016 · 35 posts · 20 votes

I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.

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Ko KashiwagiPro Member
Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
1y

Hi Axel,

75% of initial cash purchase can be easily done with both conventional or DSCR as a delayed purchase. You'd be able to get more cash out with DSCR with lower seasoning.

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  • AJ ExnerPro Member
    Lender · Springfield, MO · Member since 2023 · 652 posts · 314 votes
    1y

    Absolutely,

    So I would classify this with my clients as a 'Delayed Purchase' or an 'Unseasoned Refinance'. Most groups could do that + still set you up with an escrow to repair the foundation which would still put you in position to BRRRR it in a couple of months even after that into a 30 year fixed if the value add is decent enough.

    Are you looking to do something like that, or more along the lines of just stabilizing it under a 30 year fixed from the beginning?

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  • Axel Scaggs
    OP
    Investor · Denton, TX · Member since 2016 · 35 posts · 20 votes
    1y

    Thank you for your reply. I’m ok with just getting 75% out of my initial cash purchase, if that reduces the seasoning. I can always do a full cash-out refinance in a few years if the rates make sense.

    0Reply
  • Daniel Baccarini II
    Lender · Member since 2022 · 32 posts · 8 votes
    1y

    Hi Axel, I'm not sure how much it will cost to do the repairs that you're looking to do, but if it's over $10k, then I know lenders that will waive their seasoning period for DSCR loans. If you won't quite hit $10k, then you could refinance sooner, you are just limited in how much you can pull out (loan amount can't exceed what you spent on the property). Either way, it sounds like you would have some options at being able to pull out 75% of the original cash purchase.

    0Reply
  • Devin PetersonBusiness Member
    Lender · Sarasota, FL · Member since 2022 · 2k+ posts · 664 votes
    1y
    Quote from @Axel Scaggs:

    I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.


     Axel, yes, Axel you have several options here I would recommend talking with an experienced loan broker who can help you shop and compare rates and program for a bunch of different blenders.

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  • Ko KashiwagiPro Member
    Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
    1y

    Hi Axel,

    75% of initial cash purchase can be easily done with both conventional or DSCR as a delayed purchase. You'd be able to get more cash out with DSCR with lower seasoning.

    310-848-9776
    1Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    1y
    Quote from @Axel Scaggs:

    I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.


    I think we could help if you need it with a DSCR refinance

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  • Jay HurstBusiness Member
    Lender · Dallas, TX · Member since 2017 · 1k+ posts · 1k+ votes
    1y
    Quote from @Axel Scaggs:

    I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.


     North Texas based and we have multiple no seasoning options. 

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  • Terry FannBusiness Member
    Lender · TX · Member since 2025 · 8 posts · 2 votes
    1y
    Quote from @Axel Scaggs:

    I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.


     Yes that is possible its called delayed financing.    We do those all the time.    I am in Allen Texas.   I can answer any questions if you need help.   

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  • Axel Scaggs
    OP
    Investor · Denton, TX · Member since 2016 · 35 posts · 20 votes
    1y

    Thanks for all the info guys!

    0Reply
  • Jeb Durgin
    Lender · South Lake Tahoe, CA · Member since 2019 · 109 posts · 36 votes
    1y
    Quote from @Axel Scaggs:

    I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.


    Sounds like a good approach on the off-market deal and foundation repair. For conventional and DSCR lenders, it's pretty typical that refinancing is based on the current appraised value or ARV, not just the purchase price, and many require some seasoning—usually anywhere from 3 to 6 months.

    Refinancing at 70-75% of just the purchase price with little to no seasoning is uncommon with conventional or DSCR loans. You might find some flexibility with certain lenders, but it's often limited. Hard money lenders tend to be more flexible in those areas if you want to avoid tying up your funds for too long.

    Hope that helps clarify things!

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  • Logan Lambert
    Lender · Kingsville, MD · Member since 2023 · 103 posts · 35 votes
    1y
    Quote from @Axel Scaggs:

    I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.


     Hey,

    Great questions here. This would be what is considered a delayed purchase and we could go 80% of the purchase price and rehab costs with no seasoning. Shoot me a connection and lets talk!

    0Reply
  • Connor Hibbs
    Lender · Ellington, CT · Member since 2024 · 210 posts · 103 votes
    1y

    Hi @Axel Scaggs, in this scenario you would be better off using a delayed purchase rehab loan to ensure that you have enough funds for all of the repairs that you want to complete on this one. Delayed purchase loans for rehabs will still allow you to get upwards of 75-95% of the purchase price (depending on your rehab experience and if you've completed rehabs in that area before).

    After the work is done then you'll want to move forward with the DSCR. If the appraisal comes back as "subject to" then most lenders would need the repairs to be completed before moving forward with the DSCR loan anyways (foundation issues would prevent you from closing as a DSCR prior to that being repaired). This will also give you an opportunity to find tenants to figure out what the cash flow of the property is prior to locking yourself into a long-term loan.

    If you have any other questions about this, seasoning, LTV's, etc... I'd be happy to help.

    0Reply
  • Zach Wain
    Scottsdale, AZ · Member since 2019 · 434 posts · 248 votes
    1y

    @Axel Scaggs - We have "delayed financing" options for conventional loans as well as Non QM/DSCR loans as well. We have 1 program that allows for the new appraised value to be used when doing delayed financing instead of the purchase price. This may get you a lower loan to value/lower rates and fees compared to using the purchase price.

    0Reply
  • Andrew Zamboroski
    Lender · Member since 2021 · 495 posts · 130 votes
    1y
    Quote from @Axel Scaggs:

    I recently found an off-market property and was able to negotiate the price down due to foundation concerns. I plan to purchase it in cash and repair the foundation. Other than that, I will be adding a closet to a bedroom and fixing a few small things. Everything else is in good shape. My question is, are there conventional or DSCR lenders that would allow me to refinance 70-75% of just the initial purchase price, not the ARV, with no or little seasoning? I have a few other properties I'm watching and would hate to have a large chunk of my funds tied up for 6 months. I'm talking with one lender that seems promising, but if anyone knows a good lender, I'm open to suggestions. I'm in north Texas.

    Lots of options once the foundation is repaired. In the DSCR space, almost anyone should be able to help!
    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    1y

    Yes you should be able to do it easily. Most lenders would price this as a rate and term refi, so the rate will be better 

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  • Stacy RaskinBusiness Member
    Lender · Member since 2022 · 1k+ posts · 501 votes
    1y

    Pulling your cash out that you used to purchase the property within 6 months of the closing date is called delayed financing. There are DSCR lenders that will allow 75-80% LTV of the cash that you paid on the property. Some allow you to include closing costs that you paid on the first transaction.

    More on DSCR loans: DSCR loans won't use your income to underwrite the loan.

    DSCR loans are based off of down payment, credit score and either actual or market rents so it helps to supercharge an investor's real estate goals and net worth.

    Here's a bit more in detail about how rates are calculated for DSCR loans:

    1. Credit score- the higher the best. 760-780+ generally gets best pricing for investment property loans with most lenders. From there every 20 point increment affect pricing differently. So for example, a 761 credit score will be in the 760-779 credit category, then going down to 740-759 and so on.

    2. Loan to value ratio: The higher the loan to value ratio (LTV) is, pricing takes a hit. So your pricing will be higher for a 80% LTV loan than for a 60% LTV loan.

    3. Prepayment penalties- usually 1-5 year terms. The shorter the prepayment term has an impact on increasing the rate.

    4. Are you cash flowing the property? More on how that is calculated below. Is your DSCR ratio greater than 1-meaning are you cash flowing (according to the lender's criteria of mortgage, property taxes and insurance (and HOA) if applicable). Many lenders will not do a DSCR loan unless cash flowing. If they will do a loan with less than 1, the pricing takes a hit. This criteria is for 1-4 and 5-8 unit programs.

    I've included an example below to help illustrate this.

    So different lenders have different rates (which do vary even for DSCR loans) but these are factors they all consider.

    See example below:

    DSCR < 1

    Principal + Interest = $1,700

    Taxes = $350, Insurance = $100, Association Dues = $50

    Total PITIA = $2200

    Rent = $2000

    DSCR = Rent/PITIA = 2000/2200 = 0.91

    Since the DSCR is 0.91, we know the expenses are greater than the income of the property.

    DSCR >1

    Principal + Interest = $1,500

    Taxes = $250, Insurance = $100, Association Dues = $25

    Total PITIA = $1875 Rent = $2300

    DSCR = Rent/PITIA = 2300/1875 = 1.23

    If a purchase, you also generally need reserves / savings to show you have 3-6 month payments of PITIA (principal / interest (mortgage payment), property taxes and insurance and HOA (if applicable). If a cash out refinance, many lenders will allow the cash out to satisfy the reserves requirement.

    DSCR lenders generally let you vest either individually or as an LLC. It's a great way to increase your net worth and these loans can also be used to pull cash out of a property as it appreciates allowing you to reinvest money into new deals.

    Happy to connect to discuss further. 

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