All Forum Posts by: Alan Mills

@Kenneth Garrett Excellent suggestion. I've been looking into an LLC. Time to dig deeper.

Hi BP,

I’d like to generate a fresh thread to address an issue that is catching many new investors by surprise: The 6-month Seasoning period.

I'm now on my 3rd Rental. It was time to give the BRRRR strategy a try. I purchased my first multi-family property property - a duplex - with cash. Rehab is under way (also cash) and it is looking great at 45 days. Time to get cash-out refinancing lined up, now at about 45 days out from completion - and hopefully tenant occupancy.

Enter the 6-month Seasoning requirement. For a new investor, this "S" really came as a surprise on my first BRRRR deal. It was just a bit of a left hook for me to learn about how Fannie & Freddie require 6 months on title before funding a cash out refinance, particularly on an investment property. I have since put in a fair amount of hours trying to track down options, such as local and national portfolio lenders (which always seem to be at a higher APR), I've learned a bit about delayed financing, and I've had a few conversations with hard money lenders, which doesn't seem to be the best way to go this time being that I did already have the cash upfront to make this project possible.

I’m hoping that we can generate some new perspectives on this issue in today’s market, particularly with the onset Coronavirus issue now entering into market conditions. (Maybe this is a non-issue?) Or perhaps there is a podcast (or other BP posts) that I missed that goes into more details on this issue. I enjoyed reading @Brandon Turner’s book, but it strikes me that this issue is reasonably important and doesn’t receive as much attention as it could use.

For a relatively green investor without a large amount of capital on hand, BRRRR-ing 2 properties per year seems like a slow way to get out of the starting gate, albeit perhaps one of the safest ways to get going.

In my specific situation, I can certainly carry the property for the full 6-months on title that is required by most lenders to get the best cash out refinancing options available. But is that really the best way to proceed in my current situation? What other advice would you suggest when it's time to move onto my next BRRRR deal? I really enjoy rolling up my sleeves and doing the work, but I could use some advice making some important decisions now and in the future.

Thanks BP world. BP Rocks!

Alan, investing in Colorado

@Tim Wieneke thank you very much. I am certainly shopping around for other insurance carriers. Alan

@John Mocker

I really appreciate all of the information you provided. So much for me to learn. If you would like to connect up regarding your ability to provide insurance for my duplex, please let me know. Alan

@Kenneth Garrett

I really appreciate your detailed information. It appears that we will pass code if we install illuminated “Exit” signs above each of the two stairway exits. Thoughts? Alan

@Rod Hanks thank you. Glad to hear this. Now it’s a matter of connecting up with companies who can do so in Colorado.

@Harjeet Bhatti if my ARV is what I think it will be, 70% LTV shouldn't be a problem. But even if the ARV is a bit lower, I'm still okay with doing so.

@Steve Vaughan thanks for your thoughts.

@Upen Patel thank you. Hmmm... so in all of my attempts to educate myself about BRRRR properties before jumping in, I guess the part about the 6-month wait to cash out refi didn't sink in. It is not unfamiliar, but I guess I didn't realize how difficult it might be to find a lender willing to do it in less than 6 months. Maybe i can find a portfolio lender or credit union in Colorado or other national lenders who could help.

Working my first BRRRR in Colorado. The property was purchased using cash from a HELOC. I'll be looking to cash out refi after rehab is done, but I'm having difficulties finding reputable lenders with competitive rates and fees who do not require at least 6-months on title (I'll be looking to do it in less than 90 days since purchase) before they are willing to do the loan. I'm being told this is, in part, to discourage house flipping. True? But this is a buy and hold property for me. The estimated loan will be about $120,000, so we are hoping for $160k ARV. I would appreciate any strategies that you can offer, either in posts below or private messages. Thanks!