BRRRR and Seasoning Period

[Tyler Wehrung]

Hello BP!

I have an accepted offer on my first property that I am purchasing with all cash. My strategy was to purchase with cash, rehab, rent, refinance. I just recently learned about the "seasoning" period which from what I've read can vary between six months to a year. Within this period you can only refinance for the current value of property or the sale price - whichever is lower (I would hope the latter is always true and in my case it is) and this is called delayed financing. I've heard/read a lot about BRRR, but I've not heard anyone mention this seasoning period before. I'm wondering if there is a way around it or if its just something you have to accept, wait it out, then continue on? If that is the case, I'm thinking about the delayed financing option to at least get 80% of my money back to put in other deals so I'm not sitting on the sidelines for a year. I'm interested to hear thoughts from you more experienced investors. If you need any additional details, feel free to ask. Any info is greatly appreciated!

Thanks in advance,

Tyler

[Mike Warder]

@Tyler Wehrung Congrats on the first property! What you've heard about seasoning is true. The seasoning period is typically 6 months, although every once in a while I'll read on the forums that someone who has a relationship with a small local bank can get that bank to wiggle a bit on that rule. 80% using DFE is higher than what people normally talk about, which is usually 70-75%. Assuming you got the property far below market value, I'd recommend doing what you can to wait out the seasoning period. If you pull out 80% of purchase price now, you might be kicking yourself later on when you have untapped equity sitting in that house and higher interest rates make it more difficult to get to.