BRRRR LTV Refinancing With No Seasoning Period

[Dan Valiente]

First ever post here!! My question is how are you professionals able to cash out refinance on LTV without waiting the 6 month seasoning period? Are there requirements that must be met? Does it depend on the bank? Does it depend on the type of property? Depend on the state the property is in? I would be paying cash for the property and rehab if that makes a difference as well.

I'm excited to be here on this community, can't wait to network with you all!

[Shiloh Lundahl]

@Dan Valiente it can depend on your relationship with the bank but generally banks will give you 70% of the appraised value or 80% of the cost plus rehab, whichever is less. That can make it difficult to do a true BRRRR where you get most, if not all, of your own money out of the property upon the refinance.

The way we work around this is we buy the property and put the rehab costs into the closing to be held in escrow for when we buy the property. Then we take draws on that money during the rehab. Any extra money that didn’t end up getting used in the rehab just goes back into our account.

When we go to get the refi done, the appraiser looks at what we bought the property for (what it closed at with the county records) and then he or she appraises it at market value. The bank looks at what we bought it for as well. However, they don’t see the wholesale price we bought it for, they see the market price of what we are going to sell it for.

We are usually able to get loans for our properties at 70% of market value by doing it this way. Most buyers and sellers and title companies are not aware or familiar with doing this so very few investors take advantage of this opportunity.