Advice on $85K SFR in Dayton, OH (cash purchase, tenant placed)

[Joe J.]

We recently bought (at auction) and fixed up an ~$85K (post-reno) townhouse (2 large BR, 2 full + 2 half bath) in a nicer Dayton, Ohio, suburb. We have tenants in place on a one-year lease currently ($950/month), which is currently in the third month. We're pretty pleased with this, and would be even more excited if we could cash out!

This was a cash purchase, so we're not looking to do a "re"-finance, but rather acquire an initial loan on the property for some fraction of the value (to proceed with BRRR, of course). Is that even possible before a one-year seasoning period--I know it may not be if there is an existing loan, but does this differ since it was a cash purchase and there's no existing note? (Also, since this is one of our first deals, we probably don't really need the income from the rental to qualify for a mortgage.)

Anyone have recommendations on how best to proceed on this in the Dayton or Cincinnati area (or nationally)--what would other folks here on BP who have had success recommend?

[Jorge Ruiz]

@Joe J. 

Here is something I ran across in another discussion that I copied and will paste it. Here it is:

Buying a home with cash has become increasingly popular for many investors but often an investor will be caught with the restrictions to cash out loans if they need to get their money back. There is a plan to avoid this entire section (In section 3) but it is important for us to know about these restrictions. If an investor is buying with cash and flipping they get their money back when they sell the property. But if they are seeking to hold a property for any length of time and want their cash investment back there are some important rules to understand with conventional loan:

If you buy a property with cash (or with a HELOC) you can receive a cash out loan on Day 1.

There is not a 6 month waiting period with receiving a cash out loan if you purchased a home with cash or with a HELOC

BUT you will be limited to the amount of….

Your purchase price + closing costs (costs when you purchased the home)

OR

75% of the “After Repair Value”…

WHICHEVER IS THE LOWER AMOUNT(super important)

These rules are important to understand so here are two examples:

Example 1: If you purchased a home with $50k of cash, and put $30k of renovations into the loan, and the home was worth $100k. 75% is $75k and $50k is your purchase price. So you could only receive $50k in your first 6 months ofownership since the LOWER amount is your purchase price. After 6 months you could receive the full 75% of the ARV.

Hope this helps. All the best to you.

Jorge