Unlock Equity on rehabbed property

Hello All!,

It’s my first post on this board, so be gentle :beer. I have spent the last couple of months reading the forum. In that short time, I have learned a great deal, I realize now that I have made some silly mistakes, but at least I am in the game I suppose :shocked

I am rehabbing a property with an appraised value of $143,000. I purchased for $95,000 and will be putting in about $20 to rehab. Some of the rehab is borrowed on my primary balllon loan, some from my personal HELOC. (The rehab fees are high as I have decided to replace some things that are not urgent, but makes sense to replace within a year or so; water heater for example). My current loan is one year ballon at 7% interest only.

Here is my question, I want to refinance the property with conventional financing once the property is rehabbed. I have searched for “cash out” refi, but I am a little confused by the answer. Can I refinance the existing ballon loan and also borrow on the equity that I have created from the rehab? For example, my ballon will be around $107,000, appraised value $143,000. Can I pay off the $107,000 and also borrow on the difference between the $143,000 and the $107,000?

Thank you so much for any assistance. I know that this is a simple, stupid question, but I “needs” the help!!



Under conforming guidelines you should be able get 85% with full documentation of income/assets. Loan will have pmi because over 80%. If stated income possibly 75%. By chance property is in a declining market reduce above by 5%. This works for 1-2 units.

Sometimes lenders create their own internal policies restricting cash out refinances on properties just purchased. Finding a broker that knows wat they are doing and which lenders to use can be challenge.

I’d read through the forum and search under no seasoning. You’ll see plenty of us that post advice on this.

Perfect! Just the help I needed. Thank you.

Yeah, make sure your broker nows what they are doing and has actually done a cash-out refi before. Cash-outs are really tough to get these days from my personal experience.

On a sidenote: If the home is worth 143k after repairs…you paid way to much for it! I personally wouldn’t have paid more than 80k for it. there are a lot of good deals out here in that smae price range, with more $equity$ and less repairs needed…I am trying to get rid of a few great ones right now. If anyones interested ;D

Thanks for the advice. Much appreciated. I actually asked the broker that I planned on using if he had done a cash refi before. He had not. I will find one that has.

Thanks for your comments regarding the price and repairs. The ARV of $143K is quite conservative, but I understand how the numbers look, not a home run, but this is my first property purchase. Learning can cost money! As I said, some silly mistakes.

I do plan on buying property at a much bigger discount in the future. As I stated, I am replacing many things within the property that I don’t need to, but I have the cash from a large bonus, so I decided to spend now. The bare minimum necessary repairs to rent are around $12K (I plan on holding for at least 5 years, most likely 7 years or more - I am a get rich slow kinda guy).

Again, thanks for your comments!