Seasoning period for cash buyers?

[Brian Garrett]

I was under the impression if you paid cash to purchase a property that you would then be able to cash out refinance as soon as you have finished the rehab and rented the unit out utilizing the BRRRR strategy. I was just told in another thread that even if you pay cash for a property you still have to wait 6 months in order to get your cash back out at the ARV value and if you try to cash out refinance prior to 6 months you would only be able to get the LTV based on the purchase price. Is this the case all the time or does it vary depending on the lender? The whole point of the BRRRR strategy is to force appreciation through the rehab ultimately creating a higher value and appraisal so when you take your 70-75% LTV you get all of your money back out. Can anyone help clarify?

[Account Closed]

hi Brian - here's the deal on delayed financing through Fannie Mae -- if you buy a property in cash, you can take cash out within the first 6 months using the delayed financing exception (other than death, inheritance or divorce this is the only way to take cash out on a conventional loan within the first 6 months) -- 1) all money used to purchase the property must be your money. You have to present the closing statement to the lender and source of funds to prove the property was purchased with your cash (can be borrowed from HELOC, etc as well). The loan must disburse no more than 6 months from the date you purchased the property. 2) the lender can you lend you up to 70% of the MARKET VALUE (per an appraisal) of the home (not the purchase price), provided 70% of market value is not greater than the original purchase price. Keep in mind the rehab must be complete and the property condition must adhere to FNMA standards from an appraisal standpoint (all rooms must be finished, painted, etc., and meet applicable state laws related to carbon monoxide detectors, water heaters, etc.). You can typically qualify for this so long as you will not have more than 10 financed 1-4 unit residential properties after taking the cash out. Feel free to PM me with any additional questions