If I spend…

25k on property (cash)
20k on rehab (cash)

House gets appraised for 65k, but I want to rent it. (1400 a month)

What I want to do is take the initial 45k out of the house (leaving 20k in equity) so I can do the same thing elsewhere. Then I want to rent the house out until I decide it’s time to sell. what sort of options do I have with my financing? Would I be better off just getting financing on the initial purchase of the home?

If the property is not in average habitatable condition you may have a hard time findinga lender to do the purchase loan. Since reehab funds aren’t normally included the loan amount will be small and might not meet minimums.

I like your plan. It gives you more control. Just be sure you qualify for a no seasoning cash out refi.

A mortgage planning consultant specializing in investment loans should be able to do that.


I believe the OP is inquiring about exit loans—in his example, he is using CASH to purchase and rehab…

Here is a few rules of thumb to consider:

  • Measure your exit strategy before you enter a deal (although lending guidelines have been a moving target for the majority of 2007, having a clear entry and exit plan just makes good fiscal sense).
  • Investigate exit loans that allow for no & limited (3 months or more) title seasoning (what will need will depend on how long it will take you to rehab, when you intend to recapture capitial investment and how long your intended holding period will be).
  • Try to keep your cash out refinance requirements equal or less then 75% (this is the current ceiling set by FNMA for investors).

Hope this helps and good luck!


Scott Miller

One additional comment on the 75 LTV comments—there are loan programs that you might qualify for that allow up to 80-90 LTV on a cas out refinance basis—these lenders allow a “one off” (you can only do one loan with the lender based upon these terms) for investors…


Scott Miller