Investor · Pittsburgh, PA · Member since 2016 · 15 posts · 8 votes
I have been reaching out to local banks and credit unions in the Pittsburgh PA area in search of anyone who will do a cash out refinance at the currently appraised value without needing a full year of seasoning. I have talked to 6 local banks and 3 credit unions and they are all requiring a year of seasoning.
This is killing my plan of buying more properties quickly with my own cash. I bought a house for 53k, put ~30k into it, and now looking at comps it should be worth ~115k. Its currently rented for $1,100.
Its not worth it to refinance at the purchase price. Does anyone out there know any lenders with more lenient requirements when it comes to seasoning periods. I have two properties currently owned outright to be refinanced, one has been owned over a year and isn't a problem. The properties are owned within an LLC.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
@Tim Andy, 1 year seasoning is pretty standard on a commercial loan, which is what you'll need if the property is owned by a LLC. I wouldn't expect standards to get looser with all that's going on.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
@Tim Andy, 1 year seasoning is pretty standard on a commercial loan, which is what you'll need if the property is owned by a LLC. I wouldn't expect standards to get looser with all that's going on.
Rental Property Investor · Pittsburgh, PA · Member since 2018 · 24 posts · 8 votes
6y
@Tim Andy Just before The whole covid thing I found quite a few banks that would refinance with a 6 month seasoning period. I will tell you right now that is pretty rare, but even worse the rates are through the roof. I did find a small local bank that would do a heloc, but they are very area specific unfortunately. In my opinion right now I would weather the storm and get ready to go for it in a few months.
Specialist · PA · Member since 2016 · 143 posts · 71 votes
6y
@Tim Andy We bought a SFR and all in we spent about 110K PP + Rehab. We completed rehab in Nov. It rented in Nov, and I started looking for financing in Dec. Went to/spoke with about 7 local banks or CUs. I plan move forward with a local lender in Feb. It appraised for 145K in February. They offered me 85K @ 4.75% Cash Out 5yr/15yr Amortization in early Feb. I sat on it for few weeks because I didn't like their offer. They said my DSCR is is lower, that I need to raise. I plan to rent the garage to raise DSCR and was in middle of it when outbreaks started to unfold. Fed lowered the rates. I finally settled for 90K @ 4.25% 5/15yr Amortization at end of March. I paid less than 2K in fees for this Commercial Loan. I was asked an hour before loan closing, if my tenants are still employed.
Lending is getting stricter now because of uncertainty. Banks want to minimize their risk. If anyone offers you 60-70% of ARV, take it now.
Have you calculated your DSCR or DCR, it must be over 1.20%? Your DTI should't be too high either, since you will be asked to personally guarantee the loan.
Investor · Pittsburgh, PA · Member since 2016 · 15 posts · 8 votes
6y
@Zach Snyder A few lenders are telling me they can do a 5/20yr amoritization @ 4.25% for 80% of the appraised value, but its just that seasoning period that's killing me. The pandemic is definitely consuming a lot of the banks time so getting anything done will be a few weeks out.
@Steve K. I believe my DSCR and DCR will be sufficient as will my debt to income right now. I on;y have 3 rentals and speaking to banks before my DTI ratio shouldn't be an issue until i get to 10+ rentals. For the two properties I'm trying to refi I believe the one is worth 90k its rented for 975/month and taxes are only 1000/year. The other I believe is worth 110k and its rented for 1100/month, taxes on that are 1100 a year. I'm really hoping to get some cash out so I'm in a good position when this crisis starts to hit the housing market and deals start to become available.
Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Tim Andy
Call around to small local community banks. I do refi's all the time with lenders that require 0 seasoning. In fact, I'm doing one now and found 3 lenders this week with no seasoning requirements. They're in Ohio, but I doubt PA would be any different.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
6y
@Tim Andy are you needing a cash out loan because you are purchasing with cash? And do you know if you would be qualified for a Fannie/Freddie type of loan?
Investor · Pittsburgh, PA · Member since 2016 · 15 posts · 8 votes
6y
@Andrew Postell Yeah I bought and rehabbed with cash and now I need to pull that capital back out so I can start my next project. These are owned within an LLC so I need a commercial loan.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
6y
@Tim Andy just because you purchased in a LLC doesn't mean you have to go commercial. You can still go Fannie/Freddie if you wanted to. And if you can qualify for a Fannie/Freddie loan I wrote an entire article for Bigger Pockets on how to structure your cash purchases so you don't have any seasoning requirements. You can refinance day one. You can read the article HERE. Let me know if you have any questions on it. Thanks!