Refinance after cash purchase

[Deepak Arora]

I am purchasing an off market property in Rocklin, CA using all cash. However, I'd like to refinance asap based on current market value. I looked into Delayed Financing but it only provides financing on the Purchase Price. My purchase price is substantially lower than the current market value as the property is distressed and needs work. I am trying to see if there's a possibility of getting a refi done on the then appraised value once the property has been rehabbed, which would be a month or two after closing. 

Is there any option to do that or do I have to wait at least 6 months?

Any pointers would be greatly appreciated 🙏

[Andrew Postell]

@Deepak Arora keep in mind that Fannie/Freddie is just ONE type of loan....there are others. So would transfering it to an LLC be of any use...no to Fannie/Freddie. But other loans might not even care about any seasoning at all.

Generally speaking there are 2 main types of loans for investors: “Conventional” and “Portfolio”

Conventional - I'll define these as loans that come from Fannie Mae and Freddie Mac (if you recognize those names). These loans are all 30 year fixed rate loans. They have the lowest rates we can find and since they are 30 year fixed...they allow us to cash flow better...which helps us qualify for other loans later. The draw back to these loans is that they are more paperwork heavy than the other "portfolio" types of loans....but if you have ever received a loan on your primary home, it's likely that you will go through the same type of paperwork here with conventional lending. Fannie/Freddie money = Fannie/Freddie rules. NOT the bank's own money.  These are the ones that have the strict seasoning.  Lenders are allowed to be MORE strict than their guidelines...but not less strict.  

Portfolio - I'll define these loans as loans that come from the bank's own "portfolio" of money. Sometimes referred to as "commercial" loans. These loans are a lot more flexible than "conventional" loans. Bank's money = Bank's rules. If they like you, then maybe they will lend to you. But since there is a limit to how much money the bank has access to....their rate will be higher...and usually a shorter term. The most common portfolio style loan in Texas is a 20 year adjustable rate loan. These loans are easier to get but the terms are different.  These may not care about anything that we mentioned here....but there are some that might even require MORE seasoning.  So it just depends on the lender.

How do we know which lenders are more flexible for us as investors?  Read this post HERE on how to find good, real estate investor friendly lenders.