Seasoning Period for Refinance

BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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Seasoning Period for Refinance

Erin Francis
Rental Property Investor · St. Louis, MO. · Member since 2019 · 12 posts · 3 votes

So I am doing the BRRRR strategy and I was wondering if the seasoning period to refinance only counts to a bank while a tenant is present or if the rehab time counts towards it?

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Alex BekezaBusiness Member
Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
6y

@Erin Francis Typically you only need to worry about the purchase date.  Most lenders are just looking for TITLE seasoning not TENANT seasoning.  HOWEVER, there are SOME lenders who may require the tenant to be in place for x amount of months.  I would say the majority are fine with a proof of deposit and signed lease.  I've sent appraisers out before the tenant even moved in once I had the signed lease + deposit. 

Are you expecting to utilize a conventional loan or some sort of alternative (non qm, commercial, portfolio, etc)?

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  • Account Closed
    Investor · Denver CO · Member since 2020 · 17 posts · 4 votes
    6y

    Hi, I guess it depends on the lender. Different lenders have different policies.

    When I asked my lender yesterday what the rule was, i was told it's 6 months from the purchase date.

    Good luck!!!

    1Reply
  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    6y

    @Erin Francis Typically you only need to worry about the purchase date.  Most lenders are just looking for TITLE seasoning not TENANT seasoning.  HOWEVER, there are SOME lenders who may require the tenant to be in place for x amount of months.  I would say the majority are fine with a proof of deposit and signed lease.  I've sent appraisers out before the tenant even moved in once I had the signed lease + deposit. 

    Are you expecting to utilize a conventional loan or some sort of alternative (non qm, commercial, portfolio, etc)?

    [email protected]818-606-8823
    Investor Property Loan5308 Reviews
    WebsiteView Page
    2Reply
  • Erin Francis
    OP
    Rental Property Investor · St. Louis, MO. · Member since 2019 · 12 posts · 3 votes
    6y

    @Alex Bekeza I think I'm going to have to use a commercial loan because my property is in in a LLC.

    0Reply
  • Stone Saathoff
    Investor · San Antonio, TX · Member since 2019 · 576 posts · 307 votes
    6y

    Also curious to hear responses on this. One of my out of state rental investors who buys in San Antonio is looking to do a cash out re-finance on two single family rental properties he purchased from me a little earlier this year. Is there a way to avoid the 6 month seasoning period? I saw a post earlier about how you could re finance the cash purchase and rehab price immediately without waiting 6 months. Any comments on this?

    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    6y

    @Stone Saathoff

    Texas is a island unto itself when it comes to cash out refinances.  You should contact someone like @Andrew Postell for guidance on that one.

    I think the way to avoid the 6 months is to include the rehab amount on the original HUD. There are threads on that in BP. I've never seen it done, but some people say it works. Like @Alex Bekeza said, some lenders want their properties to be rented for x amount of months (usually portfolio lenders) and conventional lenders may have overlays.

    @Erin Francis

    Some Fannie lenders will allow an LLC if it's a single member LLC. Not all will allow it, but if they don't, it's an overlay. I've attached the Fannie Mae seller's guide for your review.

    Best of luck

    Stephanie

    https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B2-Eligibility/Chapter-B2-1-Mortgage-Eligibility/Section-B2-1-3-Loan-Purpose/1736853471/B2-1-3-03-Cash-Out-Refinance-Transactions-07-03-2019.htm

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  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    6y

    @Erin Francis

    The seasoning requirement of 6 months is a residential loan requirement.  Most commercial lenders have no seasoning requirement.  By the time you get through the mortgage process it will be 60 days anyway and if you need to conduct a rehab your most likely at 90 days.  I have done numerous commercial mortgages and never had an issue with seasoning.

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