What is the best way to cash out on a REFI for alternate exit strategy?

[Jeff Wells]

Hello all. The house we just finished has a total value of 45k. We have 22 into it. We JUST put it on the market and we think it will sell. However, in planning for the unexpected no sale, we can always rent it for 700-750 per month. For those with experience in transferring exit strategies from a flip to a rental, how, and where do you think the best place to go is to cash out and rent it. We were thinking, if it comes to this, we'd like to get out 30-35, rent it out, use the remaining cash to fund other projects. Could those of you who do this tell me the ins and outs of the best way to make this happen? Thank you in advance.

[Jon Holdman]

Realize that lending guidelines and practices change frequently and from lender to lender. So, speaking with lenders is your best bet for specifics.

Small loans like this can be hard to get. You'll need to find a smaller lender like a local bank or credit union.

Hard to get a loan if its on the MLS. If it has been on the MLS and didn't sell, lenders will sometimes use the last listed price as the upper bound on value. If it didn't sell at that price, the market is saying its worth less than that.

If you want a cash out loan based on a new appraisal you will likely need to wait a year. Some posters have recently said they were above to do it quicker than this, you YMMV. Before that lenders will look at what you paid and what you spent in setting a value.

You're typically limited to 80% LTV at most on a rental. So, 80% of $45K would give you $36K less costs of the refi maybe $33-34K +/-. That's assuming it appraises at $45K and you've seasoned it enough to meet the lenders minimum and you've not had it on the MLS for less than that.