Buying rentals with cash but want to finance my money back out

[Craig Gordon]

I'm looking to buy properties with cash and then get financing to pull my cash back out. I would be purchasing rental properties (duplex's and possibly small apartment units). These properties would not be owner occupant but under LLCS. The banks I talked to so far just don't seem to have the answers for this type of situation. From what I gathered by reading some posts around here is that the method I may be interested in is cash out refinancing. I'm looking to gain some clarity on if this type of financing is eligible for investment/LLC situations as again, I won't be living in these residences. I'm also looking to understand what type of rates are typically available, are they higher than conventional mortgages, are they comparable to a commercial mortgage as if I was to finance a investment property right out of the gate? What are the lengths of term available, is 20 or 30 year an option? I'm eyeing up properties that I should beable to make some repairs and appraise higher than the purchase price and repair costs. I'm not looking to finance beyond the cash I put into it, but an ideal scenario would be to finance out 100% of that money back out or as close to as the deal allows.

It seems you have to wait 6 months in order to cash out refinance, that can work for me but something like 3 months would allow me to move along into other investments quicker. Are there any other drawbacks or things I should be aware of when considering this type of financing?

I also have the cash to purchase 2-3 properties at a time. Would there be any snags trying to close on financing on multiple properties at the same time. I would have to imagine separate LLCs could avoid that if it is even an issue to begin with but definitely something I would like to have certainty on.

Any other input is much appreciated!

Thanks!

[Mark Munson]

Assuming time allots, I would use a DSCR out of the gate and avoid two closings. If you need to close quickly, then a delayed purchase refinance will work, assuming the lender you choose allows them for DSCR loans, which not all do. They will likely cash-out up 80% of the purchase price within the first 6 months and after 6 months they will do 75-80% of the appraised value. To avoid the 6 months of seasoning, some lenders will waive that timeframe if you have rehabbed the property after purchasing it. I'd be happy to connect and go into more depth if you need it, best of luck!