Cash Purchase then Refi

Hi everyone. I’d like your opinion on this. I’m in California and have the option to purchase SFR/Multi properties cash, rehabbing them, refi and then renting them. My question is do you see a benefit to purchasing it this way or is it better to just get a loan the old fashion way? The properties are all under market value and even after refi they still cash flow. My goal is to get as many properties as possible during this down market, but do not want to be restricted by the max number of properties a single person could own.



If you purchase cash, you could submit an offer with no financing contingency which should be more attractive to the sellers. You could close in a shorter amount of time as well. If you don’t re-fi, obviously you would run out of money sooner than if you put down 15% each on multiple properties. The cash out / re-fi method may cost you some more in closing costs, but you could also consider that offset by the fact that you could probably acquire these properties for a little less money by offering cash to a desperate seller.

Actually if you can pay cash, and then refinance it will save you money for the simple fact that you are only paying one set of closing costs. I just did a no seasoning cash-out on a 4-plex done exactly like this. When I reviewed the HUD from the purchase (for cash) the borrowers closing costs were $400 and that was to pay the title company for the title search.

The only issue with paying cash is getting your cash back without waiting 6 months or paying more for using hard money prior to 6 months.

Since Fannie finally changed their seasoning period to 6 months you’d have to wait or use hard money to get cash back.

You could always find a private lender who charges low feed to fund your purchases and then use a conventional loan to pay off that lien within a couple weeks. There is no seasoning period to just refi an existin first mortgage that was used to purchase.

Sometimes HML will be cheaper if they know you plan to just use them for a couple weeks.


I am looking to do the same thing (i.e. buy no money down with HML and then do a refinance). However banks told me I have to wait 6 months to do a refinance. The loan officer said because I will be doing a cash out refinance so there is this 6 month wait. Since the HML terms is 6 month, I can’t wait that long. Well, I don’t understand why it is a cash out refinance. I am simply looking to repay the 1st mortgage held by HML.

The posts above mention that one does not have to wait 6 months. Could you elaborate more on this? I found a short sale 4-plex listed for 180K that brings in $40K rent per year. It sold for 330k in 2006. I think the FMV is 240K (assume 6 times rent).

Also since I have less than 2 year history of rental income, the officer told me the 40K won’t count as income! Any way to get around that?

I have a great credit score >750.


Hi Dave,

The hard money loan you take out can be refinanced as a rate/term refinance immediatley after closing. There is no seasoning for this.