Cash purchase followed by refinance

[Jerry Padilla]

The typical waiting period for a cash-out is 6 months.

You could do it sooner with delayed financing if you paid cash - with the restriction of pulling out a max of the purchase price plus closing costs before 6 months. Delayed financing, you still go according to the property's current appraised value.

Now, Here is the Catch!

You are subject to the initial investment cost to acquire the property. 

With this scenario, Here is a quick example:

Purchase price: $100k

Closing costs: $5k

New appraisal comes in at $200k

You are all in for $105k at closing, and your new loan amount could be 112k to cover all closing costs.  This would make your net proceeds $105k 

For an SFR at an LTV of 75%, you can cash out the total amount of $150k (outside of 6 months)

For an MFR at an LTV of 70%, you can cash out $140k (outside of 6 months)

In this scenario, if you paid cash, you could recoup your investment for the same amount of money as you would have into the deal.  

Now let's say the property was valued at $300k

You will still only be able to pull out a max of $105k as that is your initial investment. So at this point, you should wait until the 6-month mark to cash out more of your equity. The good news is you have already started the process and can cash out at 6 months and 1 day!

Here is a post with more info. on Delayed Financing;

https://www.biggerpockets.com/member-blogs/5110/46871-buy-rent-rehab-refinance-cash-out-refinance-delayed-financing