"Seasoning", 70% pp, 80% ARV, and Cash Out.

[DL Martin]

I have some questions pertaining to "seasoning" and the viability of my "buy and hold" plan.

I have researched the forums extensively, reading everything that I can find on "seasoning", especially as it relates to the new mortgage finance laws. Please clarify for me:

1. Say I buy a house for $20k (cash) and rehab for $10k (cash) and then place a tenant for $600/month. Can I go seek a conventional "refinance" for this property immediately for 70% of the purchase price ($14k)? Or do I have to wait a certain number of months to show positive cash flow (rent deposits) for that property? Or do I have to wait six months to do a 70% refinance?

2. If I am able to do the above 70% refinance immediately after placing the tenant, how long do I have to wait until I could do an 80% ARV refinance? If, one year later (after purchase/rehab) the appraisal is for $60k, what percentage cash back will the bank give me? 80% of 60k? 70% of 60k?

3. If I am able to execute any of the above scenerios, will the banks allow me to do it 10 times? (10 conventional loans being the magic number).

Again, assuming an "All In" of $30k, would it make the most sense, loan cost wise, to just carry the $30k myself for the full 12 months, and then do a cash out refi at 80% ARV?

If a person wanted to do one SFR( Purchase/Rehab/Tenant Placement) per month, could he just assume that he needed $360k (12 x 30K) to make this work, using the cash out money from the first SFR (80% of 60k= $48k), to purchase the 13th property, the cash out money from the second SFT to purchase the 14th property, etc, until at the end of 22 months, he owned 22 SFR's, with mortgages on the first ten that he purchased?

At that point, (22 SFR's and 10 conventional mortgages), should he seek a real estate portfolio loan with a local bank?

Or should he just try to get a portfolio loan after self financing the first few SFR's? Is there a "magic" dollar number at which a local bank will become interested in opening a portfolio loan for a guy? Is that number $100k? Is it higher? Is it lower?

Any guidance from the BP World would be very much appreciated...

[Dave Shellenberger]

Each lender is different.. Call every bank in the area and ask those questions. Some will only let you refi 70-75% of your cash in amount, while others will do 70-75% of the appraisal.

However it can be done.. Here is an example on one of my deals I just closed (refi) on

12/5/2013- cash purchase- 39k

Rehab 15k

Tenant moved in 2/1/2014--$1100 per month

Take lease to bank, order appraisal

Appraisal comes in at 70k

Bank lends me 52,500 at 5/20 --5.25 % on 3/20/2014

Need to go on commercial side for the lending , otherwise your going to wait 6 months for seasoning.

No limit to the amount of mortgages