Hello All,
Let me start by saying that I am fairly new at this. I have purchased 3 properties in the last year 
I recently purchased a home (at 66% ARV) that only needs the carpet cleaned and the paint touched up (3 year old house), but I had to pay cash for it which tied up a lot of my resources temporarily, until I sell the house.
I was contacted by a banker about 2 more houses that I had recently inquired about which they got back from a bankrupt builder, which I am very interested in. I wanted to know the options for getting cash out of my recent cash purchase to use to pursue these other two houses. These other 2 house will also be in the 68-70% ARV range or there will be no deal. I wondered if I could get a HELOC on my recent cash purchase, or if a cash out refi was possible for a recent (3 weeks ago) purchase? What do you guys recommend?
Thanks in advance!
Great job on your current succes.
Cash out with no seasoning is available for those that qualify. It sounds like the property is in at least average habitable condition, which it must be for conventional financing. Ideally any updates should be done to help justify an appraisal value which is over the lower purchase price. A non seasoning first position heloc may be a bit more obscure. Instead of true value determining ltv it may be set that purchase price determines ltv.
Couple options available to you other than cashing out. You may want to look into a business line of credit which is unsecured. Hard money as well but at a costs.
I would need more info to determine which options would work best for you.
I agree with what Ben says in regards to the NOO HELOC. The only national bank that I know that still offers that product is Wells Fargo and it is full doc only and it has to be done in conjunction with a Wells Fargo first lien. However you may be able to walk into a Wells Fargo branch and get a better deal.
As for the other two houses. Buy them one at a time. Use the cash from the cash-out to purchase the property and do a no-seasoning cash-out to recoup your money and repeat. On the two new properties those should be in new condition meaning no rehab. So if you buy at 66% and refi at 80% you will actually walk from the table of each refinance with a 14% profit minus closing costs. That money is TAX FREE.
Is the bank wanting you to purchase the new properties with all cash? If not and they’ll loan you let’s say 80% then you should just cross collateralize the equity in the property that you paid all cash for so that you don’t have to worry about a HELOC or 2nd and all that goes with that. They’ll place a lien for 20% on the 1st property and when you sell and recoup your initial investment you’ll simply pay off that 20% and essentially move your equity to the 2nd property. Then you can use that 20% to put down on the 3rd property.
:beer
Thanks for the reply’s. All good info. The bank has mentioned all cash, but I figured that they would prefer that. They are meeting tomorrow at the bank, and have promised to call me afterward to see we have a deal worth persuing. Thanks again,