Cash out refinance on subject to transactions

[Ivan Dudley]

Is it possible to cash out refi on subject to transactions and if so how long do you have to wait after the transaction is done to do so. I am getting two houses from my parents. One is totally paid for worth about 40k to 50k and other property has a mortgage of about 36k worth about 55k. We want to tap into the equity to stabilize the properties, rent themm out, and to do other investing here in the Charlotte area. What kind of options do we have to make this happen? 

[Robert Smith]

If taking the homes Sub2 your parents would be the ones who must qualify for the refi. Since it is your parents they may be open to doing more then the traditional seller, but it could work for any seller you have that is open to Sub2. Work with them to do a refi, and once everything is signed over redo your sub 2 paperwork with the new terms and such. This is a common strategy for creative investors to create cash flow in homes or to get financing for rehabs and other deals. I used this several times a few years back with the harp program to reduce interest rate and often receive a forgiveness on a portion of the principle when the homes are under water. Depending on the property and the company you use, sometimes the cash out refi option for rental homes can vary from 65% to 85% so be mindful of this.