Can I refinance conventional if I pay cash for a rental property?

Question

I have a deal under contract (VA foreclosure) and possess enough cash to purchase and rehab it. I live in Texas. I've heard that if I pay cash and don't use a hard money lender, I would have to hold it for one year before refinancing it conventionally.

Is this true? The hard money costs I could save are significant considering I have enough cash to do it without.

I'm sure this has already been answered. Please forgive me, this is my first investment property and first post on BP.

Wayne

Jeff Wallace · Answer

@Wayne Solum

There are a lot of opinions on this thread.... Because there are a lot of financing programs. The standard rule of thumb for a cash out refinance is six months if based on the new appraised value ... However I know a lender in the Houston area who will do a cash out refinance based on the new appraised value immediately… Referred to in above posts as a delayed financing program .... This is a huge benefit if you bought the property below value and can be all in at about 75% of ARV ... You can get all your money (including rehab costs) back out for the next project If you would like more information PM me and I will forward contact info to you for the lender

Account Closed · Answer

What about a HELOC if your unable to refi?

Bil Casimir · Answer

Send me the lender please,

JD Martin · Answer

My local bank does 75% of appraised value cash refi after 6 months. That's what you should aim for.

Matthew F. · Answer

I did my first property cash & sellers note and was able to cash-out refinance 6 months after closing. Just purchased my second property for cash and my mortgage guys says 6month cash out is no problem as long as I have tenant leases signed. The caveat is that you probably won't get an 80% mortgage on appraised value (at least I didn't).

Wayne Solum · Answer

I understand the situation now. Fannie Mae will refinance it but their limits are that they will fund 75% of the appraised value OR the amount currently owed, whichever is less. If I pay cash, the amount I owe is zero so no refi loan.

If I owe hard money, then they can lend me that amount as long as it's not greater than 75% of the appraised value.

Thanks.

If I owe hard money, then they can lend me that amount as long as it's not greater than 75% of the appraised value.

Thanks.

Rob Myers · Answer

Talk to a local lender or credit union as suggested above. I found a local lender that would refinance a cash purchase after 6 months with a 70% LTV. If you do the deal right, you could be able to cash out enough to cover your initial outlay of cash leaving you the same buying ability for the next deal.

Good luck.

Wayne Solum · Answer

So, of using cash ties up the equity then my plans can't work. It would tie up nearlyall my investment money. I could tie it up for 2-3 months to save a few thousand closing costs, but not if I can't rrefi for a whole year.

Wayne Solum · Answer

The plan is to acquire at least two leveraged SF properties and rent for two years. I have an additional fund to possibly invest as a passive in an appartment deal.

Can I refinance conventional if I pay cash for a rental property?

Can I refinance conventional if I pay cash for a rental property?

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