Delayed financing/cash out refi??

[Jeff Bodenmuller]

Hey all the financial guru's out there! Got a question. 

We purchased a wholesale property in Venice FL Feb of this year.

Our plan is to rehab it within a couple months and turn it to airbnb!

Ok, so back before we bought we had a conversation with our lender and explained our strategy. They said a DSCR loan was they way to go for a cash out refinance.

So we are currently in the middle of that refinance. Our lender said they are switching it to delayed financing because the cash out will not work because of the seasoning period of 6 months...The delayed financing was a lower interest rate but they are basing it off our purchase price which was wholesale. Even though they did an appraisal and rent estimate. 

Problem then becomes we are not getting all our cash back out that we put in because they are using our original purchase price!

Does anyone have any suggestions on what we should do?

Yes we understand we can wait a couple more months and do a standard cash out refi but we are trying to get our money Asap so we can roll into another deal.

Thanks everyone!

[Jay Hurst]

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Is there a way to delayed financing straight into a DSCR post-closing? Not looking to get rehab funds as I will do that out of pocket, just looking to win the house with a lower, all cash offer. Then can look at financing it?

There's houses sub $180k in my market, that'll do all $170k cash. And get financed bidding wars north of the $210k. I just want to buy it $170k cash, then get straight into a DSCR contract and get my cash back. Rent will be in the $1800 ish range as is, and a bit higher when rehab gets into play.

 @V.G Jason   In your above scenario what would the property appraise for after rehab? 

$275-$295.

I wouldn't want a cash out refi. I just want an outright refi straight after purchase. 

 @V.G Jason    Anytime you walk away with cash it is a "cash out refi" even if getting your own cash back. In your above scenario you go with delayed financing but you would be limted to what you purchased the property for plus closing costs/pre-paids or 75% loan to value what ever is lower. So, in assuming your 170k purchase price with a 295k value you can pull out the 170k cash you purchased the property for but not the cash you put in for rehab.

To do that what we do is a bridge loan out of our pocket so we make our rules. With a solid appraisal we do not have any seasoning requirement at all. We would lend up to 75% loan to value which would be 221,250 (sometimes we will go up to 80% loan to value) so you walk away with your cash.  We then immediatly refiance that 221,250 loan amount to a long term fixed program  as a rate/term refi.  The key is that rate/term refi's do not have seasonsing periods to use the improved value.  So, by doing this you have pulled your cash back out for the next project and have a long term fixed rate. 

I just want to pay $175k for the property, then get the $175k the day after I close. How do I make this happen?

again, it goes back to what the property is worth.  if it is worth 175k no one is going to give you 175k.  What is the property worth the day after you close? 

$175k clearly. 

 The you clearly understand you are asking for a 100% mortgage right?  You will not get that.   And investors often are able to buy properties under market value, so it is not always a "clear" issue. if the house was worth 235k you could get back your 175k the next day. If the house is worth 175k you could get back 131,250 the next day. 

I'm not asking for a 100% cash out, I know normal 75-80% LTV. I want that right after I close. My OTP will be 20-25% essentially.

 Then you can do the delayed fiancing which as I put in several post above. 

"If the house is worth 175k you could get back 131,250 the next day."  That is 75% of the value of the house. Clear?