How to refinance rental property in Texas?

[Nick B.]

Hello All,

I plan to buy my first rental property but I need to figure out some financial nuances first.

Initially I was thinking of buying it with my own cash + money from HELOC on my primary residence, essentially becoming my own hard money lender. The reason is that HELOC interest rate is 3.75% vs 10-12% on hard money.

Then, once the rehab is done and property is rented, I would refinance it with a conventional loan taking all or most of my money out and paying back HELOC.

I explained this plan to a more seasoned investor but he said I would have to wait for a year before refinancing if I bought a property with all cash.

Is that right? Does it depend on a lender or is there a law that requires to wait for a year before refinancing?

Here is a numeric example to illustrate what I am trying to achieve:

• purchase price + rehab: $100K = $20K cash + $80K from HELOC
• ARV: $133K
• cashout refinance 75% of ARV: $100K goes pay off HELOC and keep $20K cash

Thanks
Nick