Cash Out Refinance w/o Seasoning, lend yourself

[Salim Katach]

Hey All,

I remember reading a post (either on BP or on another site) that talked about a way to skip the 6-12 month seasoning requirements to obtain a cash-out refinancing based upon appraisal value by lending yourself (and writing yourself a promissory note to that effect) the purchase price via a self-owned lending LLC. Basically, you're the borrower via the entity that inevitably purchase and hold the property, and you are the lender via a lending LLC. You write yourself a promissory note from the lending LLC to the borrowing LLC with a market interest rate. And you would record the promissory note with the closing so the property appears to have a mortgage which a bank will refinance on appraisal value without the seasoning requirement (or at least a lesser one). [Now the bank is refinancing another lender instead of the owner of the property]. Otherwise, as y'all know, a bank will only lend you against the contract value rather than the appraisal value. Youll have to hold the property for 6-12 months in order to get a loan against the appraisal value of the property. I remember reading an article to that effect but I cant seem to find it anywhere. Has anyone seen this article or an explanation of this strategy? Is anyone experienced in (or heard of) this strategy and can elaborate upon it?

Thanks guys

Salim Katach