Cash-out Refinance

[Anna Milligan]

So, there's this property.... 

We are new to REI and have been searching several months for our first rental. We have put offers on two properties to no avail. Now, we have our eyes on a third. There are bowing basement walls and a wet basement. I'm a structural engineer and have seen way worse, so this doesn't scare us off since I know it is repairable. Unfortunately, it does scare off banks! I have little hope that we can get financing. So, we'd like to do a cash offer. Our plan is to pay cash for the purchase, pay cash for the fixes and then do a cash-out refinance.

Questions:

1) How long do we have to wait to do a cash-out refi?

2) What sort of loan-to-value ratio can we get for a cash-out refi?  Someone told me that we could only get a loan of 65% of the total purchase price plus repair cost.  That baffles me.  Why wouldn't the bank just look at the property's current value instead of what we paid to buy and fix it?

3) Are there any other creative purchase solutions that we should consider?

Thanks for any guidance you can give!

[Mayank S.]

@Anna Milligan I did the same for one of the rental property. Paid cash, rehabbed and now waiting for seasoning period (6 months to a year varies with lender) to complete before I do cash out. Problem with delayed financing is it is based of your purchase price however seasoning cash out will be based on your FMV. So you may be able to get your entire cash investment back with cash out but not with delayed financing. This is how I understand. I still have few months before I reach out to my lender with my refinance. I would let you know how it goes. btw @Jerry Padilla is a great resource and lender to clarify all that.