How soon after closing escrow can you get a cashout refi?

[Sarah Purdum]

Hi guys!  A little about me, I have been lurking around BP for about a year, listening to the podcasts and reading blog posts.  I saved up some money over the last couple years and just put an offer for 25% down on an awesomesauce property from Roofstock. I'm stoked to start learning more as everything related to renting that property unfolds.

Here's my background:

I make about $45,000 a year, sometimes more (I'm a personal trainer in Los Angeles) and my goal is to buy ten properties minimum over ten years. All around 100k-150k in different cities. I love Roofstock's set-up, it makes it easy for me to buy in a more affordable market than LA with tenants and options for property management and financing in place.  I figure over ten years I'll be able to purchase five properties with 25% down while simultaneously getting a cash out refinance on those five properties to buy five more. That's where I'm starting anyways-as I learn more I'm sure my strategy will evolve. 

If I cannot qualify for those loans I plan on partnering up with my boyfriend and being the capital while he helps me cosign as together we make over 100k.

So, here is my question:

How soon after closing escrow on a rental property with 25% down can I cash out refinance for another rental property? And if I apply for another 100k rental property, what's the likelihood I'll get the loan with $50,000 income and two mortgage payments (both paid by tenants)?

How realistic is my plan?  Any feedback is appreciated from those that've been doing this longer than me!

[Lee Ripma]

You’re buying TK properties at 75 LTV. That means you’re getting a loan for 75% of the value (or sale price) of the home. You can do a cash out refinance when there is equity in the home beyond 75 LTV. So in order to do a cash out refi you’re going to need to value of the home to go up, either through appreciation or through improvements. In most places where TK operators are selling there is not appreciation like what you see in CA. Improvements cost money. So what you’re doing by putting 25% down on those properties is trading the 25% down for the cash flow you’re getting. You don’t have a way to do a cash-out refi unless you add value. That’s why some people prefer to do value add or BRRR investing instead of buying TK. There is nothing wrong with your strategy, it just requires putting down 25% a lot of times. So if capital is a lacking factor you’re going to be limited in growing your portfolio. I hope that makes sense and good luck to you!