Investor client needs lender for BRRR. Refinace/new purchase. SoC

[Rhonda Blue]

Howdy BiggerPockets community. I"m in Southern California and I have a client who purchased her home in Oct 2016.  She has done massive and impressive renovations and now rents part of it on Air Bnb for a nice profit. There is now another property in her community that she has her eye on because she knows it is a good money maker and she is in the prime location for managing it as an Air Bnb.

Her current lender is Eagle Home and they say that she has to wait at least a year before doing anything new. I know from reading BiggerPockets that isn't necessarily the case. So I'm reaching out for recommendations AND advice!

She would like to 1. refinance and pull cash out from the new appraisal 2. buy the new condo as primary home for lower interest rate and move into it to start the improvements. 

Thanks

[Chris Mason]

Hi @Rhonda Blue,

The actual requirement (assuming she purchased with a mortgage) from Fannie is that she wait six months to pull cash out. Eagle may tack an extra six months onto that as an overlay. Fortunately she can apply for a refinance mortgage with whomever she wishes.

However, from what you describe it may be the occupancy requirement she is coming up against. It appears she purchased the home she's at now as a primary residence (did she put less than 15% down?), meaning she promised at the closing table to live there for 12 months, and now she is trying to purchase another primary residence less than 12 months later right down the street, where she will once again make that exact same promise, having just broken it moments prior. This "occupancy for 12 months" promise is starting to appear quite dubious, no? If this is the case, Eagle is preventing her from flagging herself as having committed mortgage fraud, and she should say "thank you" for their refusal to help her shoot herself in the foot!

HOWEVER, if she intends to purchase the new property as an investment property, meaning 5% down isn't going to cut it and the rate will be higher (but if the airbnb/tenants are paying for it, who cares.... 'tis the way of BP), then the first paragraph applies and she can do her cash out refinance at the six month mark with any lender doing "Fannie Mae With No Overlays" mortgages (which I think is basically any lender on BP that is licensed in CA). The refinance needs to close after the six month mark, so she can get the ball rolling in [counting my fingers like a five year old].... March.