Hard Money For Buy and Hold

[Geo Cruz]

I've gotten mixed information from conventional lenders in terms of being able to refinance a cash or hard money property. My intent is to use the hard money loan for the acquisition of distressed, non conventional qualified properties, then stabilize them to a long term conventional loan and pull out the forced equity (essentially BRRRR).

The couple mortgage brokers that I have talked to have told me the following:

1. If the property has been acquired as cash or hard money, I will need to wait a 12 month seasoning period before I can refinance to a conventional loan and use the after repair value. I am able to refinance in 6 months, but I will be limited to the original purchase price, not the ARV.

2. Most investors in Southern California are successfully doing BRRRS on owner occupied properties because the numbers are not working on investment properties (higher rates etc). Many investors are having a heck of a time trying to stabilize hard money loans to conventional loans, therefore most hard money loans are just being used for flips and not buy and holds.

Has anyone out there successfully recently used hard money for long term buy and holds? Particularly in expensive markets such as So Cal?

[Owen Dashner]

@Geo Cruz, commercial loans with many small community banks and credit unions are way more flexible on refinances. You might consider going that route instead of jumping through all the hoops and waiting forever for conventional refi's to work for you.  Are the rates slightly higher?  Yes, but they are still historically low compared to years past. Don't trip over dollars picking up pennies.