Buy, Flip and Rent, then Refi

[Jahmal James]

Hey all experienced investors,

I am looking to buy my first buy and hold in the Baltimore, Md. area., my plan is to buy and repair at 65% rental ARV. My question, once I secure a tenant, how easy will it be to get a refinance? Considering I am planning to use hard money, I am hoping you all have experience with lenders with little to no season period. Any recommendations would be awesome.

Thanks in advance for any assistance.

JJ

[Daniel Y.]

Originally posted by @Ned Carey:

@Daniel Y. 

Yes that is my understanding. And yes that would be nationwide. I had someone here on BP say that was not true and had experience to prove it. However that is just one person making the point contrary to everything I have ever heard on the subject.

It may be somewhat a mater of semantics. There may be other terms that apply other than "Commercial loan." However, the point is that you need a different type of loan for an LLC or other entity than if you are buying properties in your own name. The GSEs ( government sponsored entities) like Freddie Mac and Fanny May were designed to help individuals not businesses. Many of the secondary lenders (the institutions that buy loans from banks) do not buy loans to LLCs.

More than once I and my fiends have had mortgage brokers tell us it would not be a problem only to have them come back later and say we can't fund that because you own it in an LLC.

Now all of this is regarding traditional lenders. hard money lenders or private lenders do not care. 

In my area the best options tend to be local smaller banks. Big banks don't want to make those small loans, However in CA because your prices are so much higher a bigger bank may take a smaller loan on.

 Hi Ned,

I appreciate you getting back to me. Just something new to consider in my buy and hold strategy. Heck, if some loan officers are not well informed on the matter, then good luck trying to find this info on search engines without proper direction. BP and its people are definitely a great and helpful resource.