Cashing Out With Conventional Financing At A Faster Rate!

Want to move faster with your cash-out refinance on an investment property with conventional financing?

The typical waiting period for a cash-out is 6 months.

You could do sooner with delayed financing if you paid cash - with the restriction of pulling out a max of the purchase price plus closing costs before 6 months. Delayed financing, you still go according to the property's current appraised value.

Now, Here is the Catch!

Renovation cost and the purchase price will need to be combined with being considered as part of your initial investment.

With this scenario, Here is a quick example:

Purchase price: $100k

Renovation Money Escrowed: $45k

Updated Purchase price - $145k

Closing costs: $5k

3 months after the job is completed, you are ready to refinance and get your money back.

The new appraisal comes in at $200k

You are all in for $150k at closing.

For an SFR at an LTV of 75%, you can cash out the total amount of $150k

For an MFR at an LTV of 70%, you can cash out $140k

In this scenario, if you paid cash, you could now recoup your investment for the same amount of money as you would have if it had been after 6 months since you weren't limited to the $105k if the renovation money wasn't part of the purchase price.

Now let's say the property was valued at $300k

You will still only be able to pull out a max of $150k as that is your initial investment. So at this point, you should wait until the 6-month mark to cash out more of your investment. The good news is you have already started the process and can cash out at 6 months and 1 day!

Here is a post with more info. on Delayed Financing;

https://www.biggerpockets.com/member-blogs/5110/46871-buy-rent-rehab-refinance-cash-out-refinance-delayed-financing