Cash Out Refi in Under 1 Year?

[Leanna Nixon]

Hi all, I am doing my first BRRRR. Purchased a 4 plex in Cleveland in August last year and put a good amount of funds into renovations. I'm hoping to do a cash-out refi as soon as possible to take the funds back out. I know most lenders want to see a year of ownership but does anyone know if there are any exceptions here? Hoping to start discussions and see if I can complete the refi sooner than August if possible. Thanks in advance for the help.

[Brittany Minocchi]

Hey Leanna!

Conventional financing requires a minimum of 12 months seasoning, but you do have other options. With completed rehab, there are lenders that require NO seasoning, although many are at the 3-6 month mark. One thing to be aware of, especially in Ohio, is the prepayment penalty typically associated with these types of loans. Ohio is goofy and some (not all) lenders require you to buy out the penalty, which means your rate will be higher. Other lenders will allow you to have a penalty up to 5 years which should have a lower rate compared to no penalty. It will be triggered upon sale OR refinance, so if you think you might want to refinance in the next couple of years (or at least have the option), you may want to consider a shorter penalty length. 

Happy to talk more, I'm also in Ohio. Feel free to reach out!