Question about Delayed Financing

[Mike Lauer]

My partner and I are looking to pay cash on a property, rehab, and then do a cash-out refi as soon as the rehab is finished. My understanding is that with this "delayed financing," you can get the loan inside of the usual 6-month seasoning period that you'd see with a conventional refi. But I've also seen conflicting info about the rules on delayed financing regarding the value of the property. With delayed financing, will banks go off market value for ARV, or off the total cash invested (purchase + rehab)? I'm sure all banks are slightly different, but what's typical?

Bottom line is we're running our BRRRR numbers based on ARV, but don't want to get stuck in a situation where that isn't an option on the cash-out refi. Any insight would be greatly appreciated!

[Harjeet Bhatti]

Under delayed financing exception you can cash out what you spend initially to purchase the property or 70% of current appraisal value which ever is less.