Updated almost 6 years ago on . Most recent reply
2nd Delayed Financing Worked Like a Charm
So I recently purchased another rental property (3bed, 2bth, built 2003, ~1300sqft). I purchased it for cash for $68K (tenant occupied, will get to this later). I put about ~$3k into the rehab and about 2-3 weeks started the delayed finance. I got the appraisal report back and it appraised for $112K. With the delayed financing I was able to get a loan for $73.6K (includes rolling in closing costs, prepaids, etc.) with conventional financing @ 30 year, 4.5%.I will collect ~$3,800 in rent before my first payment. I will be in the property for almost nothing out of pocket.On top of that, I used my 0% interest credit card offer to purchase it (my hard money lender, lol). It cost me ~$1,600.
I figured the rent comps at ~$1,050, the appraiser’s rent survey as part of the refinance figured it at ~$1,100 so this confirmed I was in the right ball park. The current tenant is only paying $850. She is a Section 8 tenant with a 2 bedroom voucher. The house is a 3 bedroom, 2 bath. She was paying the prior owner $100 outside of Section 8’s $850 but I do not want to go there. I plan to let the tenant stay until ~ May 2017 timeframe and then I will look at re-leasing closer to market rent (during better renting season). The tenant does not appear to be a bad one. Other than yard maintenance, the house was in good shape after 5 years of tenancy. I painted, did minor repairs and updates to help the appraisal.
Delayed financing is perfect when you buy a rental property at a good discount that does not require much in repairs. Depending on the number of properties you have, you can get a loan for 70%-75% of the new appraised value, or the full purchase price plus closing related costs, whichever is less. You can start the delayed financing the next day after purchase or after your rehab. Delayed financing would not be as favorable if you are planning an extensive and costly rehab because you do not get to include the rehab costs in the loan and you have to complete the delayed financing within 6 months. Can’t wait for my 2nd Subject-To deal!
Most Popular Reply
@David Nielsen, I have had no problem getting 75% LTV on my delayed financing exemption cash out refinances. I know the 70% discussion came up on the first one I did because it was my 6th loan but the lender found a way around that. How, I don't know but I would be happy to put you in touch with him. I have done 3 with him now and about to do another one after I purchase another rental next week. Send me a PM if you want his information, he is pretty active here on BP too so I should probably just give him a shoutout. @Jerry Padilla, maybe you can help David or explain how we have been able to get 75% LTV? I'll let the expert explain how...