​Chicago BRRR Two Flat

4 Replies

BPs,

Can someone ,please, provide me with some "refinance cash-out" references examples in the Chicago Market? I'm interested in actual cases reflecting my market.

We are considering buying a property cash and paying for the repairs out of pocket or through credit cards. Then, we would like to get our equity out either by Delayed Financing or after six months.

Cash 80K

Repairs 20K

ARV 130K -140 depending on repairs and condition

After researching, it seems that if we wait the six months, we can, in theory, get most of our money out.

130K * 0.75 = 97K

The, there are closing costs of course.

With delayed financing, we could refi up to the cost of the property plus closing costs.

Our main concern is that we may not be able to get the money out.  

We understand the bank performs the appraisal, and we think we could hit the ARV stated above. If the appraisal comes low, let's say 100, we could only get up to 75K.

Also, we read that some banks won't allow this if the buyer doesn't have previous landlord experience.  It seems they may require two years of experience. We do not have previous experience and we would hate to have our cash locked for two years.

Any feedback with real examples is greatly appreciated.

Frank 

Keywords

Chicago, Financing, BRR, Rehab, Mortgage, Lending, Cash-Out

@Frank S. Frank that has been our business model for 8 years now.  Many commercial banks there is no wait time except for it to be updated and occupied.  

@Nick Denning at Renovo has a 30 year product that we have used twice and then there are a hand full of community banks too that won't have any seasoning time. 

Originally posted by @Mark Ainley :

@Frank SanchezFrank that has been our business model for 8 years now.  Many commercial banks there is no wait time except for it to be updated and occupied.  

@Nick Denning at Renovo has a 30 year product that we have used twice and then there are a hand full of community banks too that won't have any seasoning time. 

 It's interesting that there is no seasoning requirement anymore. I was concern by this for I don't want to lock my cash.  

Can you please pm me a few references? I would like to move forward with this deal and want to speak to the banks first. We have perfect credit.

Thanks a lot for the information. It's greatly appreciated.

Frank

@Frank S. If you go with banks and get conventional financing they tend to require seasoning. 

If you go with the banks and do a commercial loan you tend to only get a 5 year term.  

What terms are you thinking you want or need to make your project work long term?  Are you OK with a 5 year term?

In this case, I'm keeping the building long term for cash flow. I may sell it in a few years if the market gets hot, but I'm not interested in the 5 year. I would feel safer with a 30 year. 

Will that require seasoning, then?  If so, the delayed financing may be a good option. 

https://www.fanniemae.com/content/guide/selling/b2...

http://themortgagereports.com/17489/delayed-financ...