Looking for a No Seasoning Cash-out Refi Funding

OP

Investor · Omaha, NE · Member since 2021 · 244 posts · 163 votes

@Robin Simon Thank you for your insight, I appreciate it. What’s the earliest do you believe I have to wait till I can pull out more than my basis in the deal?

You’re right, the best deal I have so far is an appraisal in 3 months with a cash-out only with the documentation of rehab.

Brittany MinocchiBusiness Member

Lender · Massillon, OH · Member since 2022 · 1k+ posts · 486 votes

[email protected]330-354-6590

Hi Sanat, I need some additional info but may be able to help. Feel free to reach out to discuss.

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Lyndsay Zwirlein

Lender · Member since 2020 · 331 posts · 209 votes

Quote from @Sanat Bhandari:

Hi everyone -

I bought a property last week using hard money. I anticipate the rehab to be done around mid-October and the property is already pre-leased starting in November at $1,450 per month.

The main issue is in the refinance part of BRRRR. I'm having a hard time finding lenders willing to do a 75-80 LTV cash-out refi with no seasoning period. The best that I have so far from my current lender/broker is 3 months but I'm not keen on paying hard money interest for a couple of months if I can avoid that.

Is there any broker/lender that can originate a DSCR for me by the end of October/early November with no seasoning period? I'm okay with pre-payment penalties and paying a premium on the interest rate (the best DSCR rate I have seen so far in my situation is 8.5%). The property is in Omaha, NE.

PP: $120,000

Rehab: $18,000

ARV: $195,000 (a local bank in town appraised the ARV at $193,300 recently)

I'm looking to pull out $144,000 from the investment so about 75 LTV based on the ARV.

Please reach out to me if you work with a lender (or are the lender) that can provide such an option. I appreciate your help.

~ Sanat

The principal + interest payment alone on $144k loan amount and 8.5% interest rate is $1108. What are the monthly tax and insurance amounts? I have a program that does not have a seasoning requirement and will go off of ARV (versus PP plus documented repairs). But ratio has to be > 1.0x. Unless you consider IO (interest only).

OP

Investor · Omaha, NE · Member since 2021 · 244 posts · 163 votes

@Lyndsay Zwirlein The monthly property taxes and insurance is $110 and $100 respectively. The total comes out to $1,318 so it does meet the DSCR requirement.

Adam Bartling

Lender · Rosenberg, TX · Member since 2022 · 287 posts · 130 votes

Who has your note? Get it sold??? I only work with a 6 month seasoning period as it limits the "not so bright ideas"

Stephanie P.Pro Member

Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes

Quote from @Sanat Bhandari:

Hi everyone -

I bought a property last week using hard money. I anticipate the rehab to be done around mid-October and the property is already pre-leased starting in November at $1,450 per month.

The main issue is in the refinance part of BRRRR. I'm having a hard time finding lenders willing to do a 75-80 LTV cash-out refi with no seasoning period. The best that I have so far from my current lender/broker is 3 months but I'm not keen on paying hard money interest for a couple of months if I can avoid that.

Is there any broker/lender that can originate a DSCR for me by the end of October/early November with no seasoning period? I'm okay with pre-payment penalties and paying a premium on the interest rate (the best DSCR rate I have seen so far in my situation is 8.5%). The property is in Omaha, NE.

PP: $120,000

Rehab: $18,000

ARV: $195,000 (a local bank in town appraised the ARV at $193,300 recently)

I'm looking to pull out $144,000 from the investment so about 75 LTV based on the ARV.

Please reach out to me if you work with a lender (or are the lender) that can provide such an option. I appreciate your help.

~ Sanat

Hey Sanat

As others have said, you're better suited to wait the extra two months to get into a stable loan product that will amortize for 30 years to maximize cash flow. .

OP

Investor · Omaha, NE · Member since 2021 · 244 posts · 163 votes

@Adam Bartling the hard money lender holds my note right now. I could sell it but I'm very much a buy-and-hold investor so I prefer not to.

6 months seems to be the standard seasoning period across the board with 3 being the minimum (makes sense why). I was looking out for something shorter in case I find it.

@Stephanie P. I agree and seemingly, that's what the main option is.

Eric Veronica

Lender · Cleveland, OH · Member since 2011 · 588 posts · 439 votes

How much do you currently owe on the hard money loan?

Based on your post you mentioned a purchase price of $120,000 with a renovation cost of $18,000. Assuming the hard money loan is $138,000. If my assumption is correct and you are paying off the entire Hard Money Loan and rolling in closing costs/taxes/prepaids there should not be any seasoning required because it would not be considered a cash out refinance. If you are just paying off the HML then it would be considered a rate and term refinance which does not require any seasoning.

OP

Investor · Omaha, NE · Member since 2021 · 244 posts · 163 votes

@Eric Veronica The hard money loan is $120,000 while the rehab of $18,000 is funded through my line of credit at a lower interest rate than hard money. I'm using my personal funds/line of credit to cover the holding costs.

That's an interesting point that I did not even consider. The $144,000 number is based on ~75 LTV at a $193,300 valuation by a local bank here in Omaha. As long as I am able to pull out the purchase price + rehab dollar amount, I am fine with that. Let's discuss this more.

Matt Cartwright

Lender · Newport Beach, CA · Member since 2016 · 68 posts · 18 votes

@Sanat Bhandari Hi Sanat, I can do cash-out with no seasoning. I will send you a PM so we can discuss in more detail.

Eric Veronica

Lender · Cleveland, OH · Member since 2011 · 588 posts · 439 votes

@Sanat Bhandari Based on that scenario you would be limited to a loan amount of $120,000 + closing costs/prepaids so a loan amount of roughly $126,000. There would be no seasoning.

If you are looking for a loan of $144,000 then that would result in you getting roughly $18,000 back at closing which would make it a cash out refinance. That would typically require 6 months seasoning for a conventional loan.

OP

Investor · Omaha, NE · Member since 2021 · 244 posts · 163 votes

@Eric Veronica so if I had taken a hard money loan at $138,000 vs splitting it as $120,000 + $18,000 LOC, then I could have done a rate term refinance for the whole amount + closing costs/prepaid vs just the $126,000 amount, correct? This is really interesting and if true, makes a case for using only hard money in purchase and rehab.

@Matt Cartwright Look forward to chatting more

Jonathan Taylor

Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes

@Sanat Bhandari is the HML a recorded note (shows on credit and recorded as a lien position on your property?) or is it a Private money loan? If its an unrecorded private money, this would classify your purchase as a cash purchase. There is something called a delayed cash out refi that can be done within 60 days of purchase. Cash out are 70-80% depending on the DSC ratio but you can pull the money out without waiting the usual seasoning period.

If it is recorded, the soonest my lenders can refi is 90 days. If your HML rates are super high and you didnt calculate at least three months of payments then there was a lapse in due diligence for this property. But all things considered this isn't a deal killing problem from what you mentioned here.

OP

Investor · Omaha, NE · Member since 2021 · 244 posts · 163 votes

@Jonathan Taylor Great question, the HML is a private money loan but I believe it is a partially recorded note since I believe there is a lien on the property (let me check) but it does not show on my credit report. Interesting, I have never heard of a delayed cash-out refi program.

You're right and I accounted for 6 months of interest payments at its super high rate so the refinance won't kill the deal. At this point, I'm just looking to perfect this already good deal and that's why I'm looking for no-seasoning cash out refi.

Olivia De Oliveira

Realtor · Memphis, TN · Member since 2018 · 8 posts · 3 votes

@Sanat Bhandari Check out Civic Financial. I did a cash out with them this year. Their fees were ridiculously high but no seasoning required.

Erik EstradaBusiness Member

Lender · Member since 2022 · 6k+ posts · 1k+ votes

[email protected]818-269-7983

Quote from @Olivia De Oliveira:

@Sanat Bhandari Check out Civic Financial. I did a cash out with them this year. Their fees were ridiculously high but no seasoning required.

I work with a lender that does a 30 year fixed, no DSCR, no seasoning requirements, and the cost is much lower. Happy to connect.

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Nick Lewis

Investor · GA · Member since 2021 · 1 post · 0 votes

Quote from @Erik Estrada:

Quote from @Olivia De Oliveira:

@Sanat Bhandari Check out Civic Financial. I did a cash out with them this year. Their fees were ridiculously high but no seasoning required.

I work with a lender that does a 30 year fixed, no DSCR, no seasoning requirements, and the cost is much lower. Happy to connect.

Hi Erik, I am in a similar situation as OP and would like to be connected if you don’t mind! I am operating in Georgia.

Eliott Elias

Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes

Can't find it. The ones that tell you they can are lying, to get full LTV cash out you need to wait 6 months. Unless you want 45% LTV

Pari Thiagasundaram

Lender · Fremont, CA · Member since 2014 · 292 posts · 102 votes

If you are still looking, please send me a message offline.