How long do I need to prove cash flow before I refinance?

[Daniel Rogers]

Hey everyone,

I am looking at a deal in Northern Michigan, I'm in love... 

22 unit motel that I am going to convert into studio apartments. The problem with that is that it has no proven cash flow history. Also, it may be a variable that it is master metered, so utilities will be included.

My question is, how long do I need to rent out a property before a bank has enough financial data to refinance the property to pay back my private lenders? Since I cover the costs of utilities, and there are large variances between the costs during winter and summer months, will that play a role? I have heard anywhere between 90 days and a full calendar year. What do you think?

Thanks,

Dan

[Seth Nadreau]

Honestly, I would wait at least one full quarter of your business year. 

If you're running this as a business, you should have monthly, quarterly and annual statements. Say your quarters run Jan-Mar, Apr-Jun, Jul-Sept and Oct-Dec... and you buy them on July 29th... I would get through that partial quarter (the rest of July through September) and then get through one whole quarter. THEN you have at least a full quarters worth of records to show cash flow, balance sheets, etc.