BRRRR using delayed financing

[Chris Mignone]

Hey all! I am in contract on my first rental property!!! I am buying for 165k and expect it to appraise for $275k ARV.

I have one mortgage guy telling me I can only get 75% of my purchase price out in cash. The other lender is telling me that I'll be able to get 75% of the ARV out in cash. All this in well under the 6 months to a year it would take under normal refi seasoning conditions.

Does anyone have any experience with this??? Please help. Thank you.

[Eric Veronica]

@Chris Mignone if you are looking to cash out with less than 6 months seasoning  you will need to use the delayed financing exception. Greater than 6 months you will not.

The delayed financing exception will not allow the cash out to exceed your initial investment plus closing costs and prepaids.  Based on your scenario  you will be limited to the purchase price of 165k plus closing costs and prepaids  

Below is the explanation pulled directly from Fannie Mae selling guide. Below that is the public link to Fannies  cash out eligibility requirements.

“The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value).”

https://www.fanniemae.com/content/guide/selling/b2/1.2/03.html