Investment Property and refi

[Jeffrey Naeger]

Hi all. Thank you for any and all advice. I could really use it. Me and a business partner bought a house with a hard money. There is no lien on the mortgage, the house is in Corpus Christi Texas. We rehabbed the property and are about 2 weeks away from completion. Everything I thought was going according to plan until we went to refi. There is a seasoning period of 6 months for the refi which is to our detriment due to the fees, etc. It behooves us to flip and take a profit but this was not our intention as we want to rent out and have passive income long term. My understanding is this was not the best way to do things for our property. We did not take a loan out so we don't have leverage essentially for the refi? We have a longer seasoning period because the bank or lender or whoever may have doubts about why we are selling so quickly? Essentially we closed on the property 2/1 and are going to be finished with a full rehab and ready for refi in 6 weeks time. Thought this was a smart thing to do, but apparently I am missing the boat on how to finance a property initially. I understand the whole idea of leveraging money that isn't yours to buy and finance a rehab, then turn that around to cash out refi with equity and to use that money for another property. What am I doing wrong people? What can I do better the 2nd time around?

[Nick Belsky]

@Jeffrey Naeger

So when does the HML mature? I am not clear what you mean by having a HML but no lien on the property... that doesn't make sense.

Either way, if you have a HML then you need to find a lender who has a very short seasoning period for full LTV refinance. I work with a few who will do a full LTV refinance at 3 months. They are tailored for BRRRR method borrowers. Find the right mortgage broker who has the right lenders. Several other lenders out there will do full LTV refis at 4 months as well.

If you did a cash purchase on the property (maybe used unsecured HML for the funds???), then you would need delayed financing. As @Reid Chauvin pointed out, there are a different set of rules for this type of financing.  You have a clock that starts on the day of recording and have only so much time to close on the refinance.  If you miss that window, you are stuck waiting until 6 months of seasoning has occurred.  The lender window varies.  Again, get with a mortgage broker who can dig into your situation and find the right solution for you.  

The point is there are solutions, we just need to get all the correct facts and you need to find the right person to help you.

Cheers!