BRRR with seller financing?

[Cody Beard]

Can you refinance an investment you have with seller financing?

The situation:

Grandparents selling house. They would sell it to me for much less AND give me seller financing (instant equity + no money!) I initially thought, wow, I could refinance it and have money to use in another investment! But would this work with seller financing? From my basic understanding - the seller has the mortgage, right?

Anyone have any creative ideas that would make this work?

[Tom S.]

@Cody Beard  Yes, you should be able to refinance in about a year or so.  So if you're buying it for $100k and it's worth $200k, you should be able to go to a bank and get a loan for the $100k and pay them off (they would have a lien on the property, which would be settled by the title co and a new one placed for the bank).  The reason for the year is because most banks require a seasoning period.

Or better yet, hopefully refi for $150k, take the extra $50k and use it for a downpayment for a good rental property.

Call around banks first, you need to make sure you qualify for a refi (credit, income etc).

I can't comment on the gift tax, speak to a CPA on that.

Good luck!