How hard to refinance?

Hi All,

I am a beginner at this and am trying to come up with a business plan for a rental property LLC with a friend of mine. We are going to start with one property and go from there. My question is, we plan to buy our first house 100% cash. After we fix it up and rent it out, we hear the next step is to refinance it, so we clear up some cash to buy another property. How hard is it to refinance these days. If the house is 100% paid for, assuming our fixes add value to the house. An 80% refi should get our original investment or close to it out of the house. But again with the banks and credit unions, is this an easy refi? What are the costs? Do they still need to look at our credit and incomes? Or is the 100% equity in the house enough for them to do the loan.

Thanks! Just trying to learn here. My fear is that the original investment money will be stuck in the house for longer then we want.



Yes the banks will still want to qualify YOU for the loan.
They will be wanting to verify W-2 income.
A couple years on the job or in the same field.
A couple years tax returns.
They will want to see some reserves.
They will want to see a low debt to income ratio. (varies depending on bank.)
They will also want a 720 credit score for the best rates.
They are also probably only going to do 75% of ARV on investment properties.
They will require insurance, flood insurance if in a flood plain, survey, and appraisal. They will order the appraisal when the time comes.
Start talking to loan officers now and see what they require and get your paperwork straight.
National banks can be a real pain to work with so you’re best off working with a local or regional bank/credit union.
Count on it taking 60 days or so to refi from the time you start.
If you find a lender who works a lot with investor this will shorten the waiting period. You can also count on paying a point or two higher for investment properties than you would for an owner occupied.