BRRRR (The Refinance part)

[Felipe A.]

I am a beginner and I think this is the part of buying real estate that becomes very scale-able. What kind of considerations do I need to make before doing a refi in the BRRRR?

For example, let's follow this simple example:

SFR for sale at $105k, ARV is about $70k. I purchase it for $70k and put 20% down ($14k). The note on the property is therefore $56k and I automatically have 30% equity (70% LTV) in the property.

When can I refinance the 70% and pull my money ($14K) out? Do I have to validate operating the property for a certain amount of time before being eligible for a refi? If not, can I technically refi the minute I get a 70% LTV on the property? (Which would technically be day 1 after owning the property.)

TIA!

[Jerry Padilla]

@Felipe A.

• The typical cash out financing is done after 6 months of owning the property, based on ARV and available for mortgages #1-4. Please see delayed financing for less than 6 months after closing.
• On a primary residence you can pull out up to 80% LTV on a SFR and up to 75% LTV on 2-4 unit multi-families.
• On an investment property; A SFR if you have #1-4 mortgages you can pull out up to 75% of the equity and a duplex is up to 70% equity.
• On an investment property; If you have #5-10 mortgages you can only pull out money in the first 6 months (delayed financing) that you own the property, if you didn't originally get a mortgage on the property. As long as the value is there (on a SFR 70% LTV and duplex 65% LTV) You can take out up to the purchase price plus closing costs on the property.
• If you are willing to pay the fees and go through two closings.... You can take out private or hard money on free and clear properties #5-10 and do a rate and term refinance with conventional to pull money out on them.

http://www.biggerpockets.com/blogs/5110/blog_posts/42766-all-about-conventional-cashing-out-on-those-properties-1-10