BRRRR - Refinance Timeline for re-appraisal

[David Brown]

Question on timeline for a BRRRR. Given the following situation: $100K purchase price, $50K Rehab, $200K ARV, and let's say hard money lender at 90% purchase + 100% of Rehab.

I was talking with a local bank and received the following guidelines:

* For commercial (LLC ownership), they won't re-appraise until I've owned the property for 1 year. Until then the baseline for LTV calculations is the purchase price ($100K), so no ability to refinance out cash

* For residential (my name / fannie mae, freddie mac lending), before 6 months they can re-appraise, but the loan can't be a "cash-out", the max loan amount is the financing basis - so if the title work said the 1st lien was $90K, that is max loan, if $140K then that is the max amount.  

* For residential after 6 months then they could do a cash-out refinance up to 75% based on fannie mae / freddie mac guidelines

Are these normal restrictions?  My intent was to execute the rehab within 3 months and get out of the private/hard money lending quickly, but that doesn't seem possible given these limitations.

[Matthew Crivelli]

The rules of banks. You can use hard money, usually 90 days after purchase, get a new appraisal, and refi into a 30 year fixed. It will be more expensive but in return you get less restrictions and less qualifiers. You also get out of the monthly interest only payments much quicker.