Delayed finance rules, FAQ, and use MY lender

I'm going to set your lending strategy on EASY MODE

People email me EVERY SINGLE DAY trying to replicate my delayed finance strategy. So I’m making this post for a few reasons 

1. post basic rules and common errors when using delayed finance

2. post frequently asked questions that come to my inbox

3. REFER my personal lender to you so you don’t have to worry about any of this! 

• BASIC RULES OF DELAYED FINANCE

If you’re not sure what delayed finance is, it’s a loan program that allows investors to skip the 6 months seasoning requirement on single family cash out refinance deals. The program will allow you to finance out 75% LTV or 100% HUD (whichever is lower) so you can’t get back more than you put it, but if you buy a value-add rehab and create 25% equity, you’re at 75% anyway! This will allow you to use one set of cash to buy a BUNCH of houses quickly. 

The good: 

• No seasoning, you can finance as soon as the property is rehabbed and rented.
• If you do it my way, you can get back 100% of your funds (including rehab costs)

The bad:

• Must use YOUR CASH. The lender will track source of funds. No private or borrowed money can be used unfortunately. 401k and HELOC money are good! 
• There is a 10 mortgage cap set by Fannie Mae, it’s not impossible to get around, but it’s tricky. I recommend using this method to get your first 10 houses and then moving on to something else. 

Here are the actual Fannie Mae rules for the program. Good to read through so you know what the deal is! 

https://www.fanniemae.com/content/guide/selling/b2/1.2/03.html

Here is why my method is so lucrative, why I was featured on the BiggerPockets Podcast to talk about it, and why I seem like such a genius

Delayed finance is not complicated, but there are a lot of intricate details that matter to maximize it’s usage. The one that really has propelled my forward and gotten so much interest is adding ancillary costs like rehab and insurance to the HUD-1.

This is a big help because delayed finance says you can only get back 100% of HUD-1, basically what you paid for the asset. So what I do is get an invoice from the contractor and my insurance agent and have it added to the HUD-1 at the time of closing. Now it forces me to pay for those costs all upfront at closing, but it also allows my to finance 100% of asset cost plus ancillary cost when I refi with no minimum seasoning time and that is huge! 

1. I bought the house, rehabbed it, got a tenant, but now my lender says I can’t refi! What should I do?
2. I asked my lender about delayed finance and he says he never heard about it
3. I asked my lender about delayed finance and he says I can’t add my rehab costs to the HUD-1
4. I just learned about this loan product and want to use it, but I already bought the house, how can I add rehab costs to the HUD-1

I get these questions constantly, the answer to all of them can be explained pretty easily at once. First. line up your exit strategy before you purchase. This cannot be understated. You need to find a lender who knows how to do this process, you need to find them before you purchase, and you need to work out the details with them from the start. having an exit strategy doesn’t mean you’ll ‘figure something else out’ if things go south, it means you have mitigated these risks before you even purchase the building. This is the single best piece of advice I can give on delayed finance and BRRR in general. Get a lender who can implement your strategy and include them from the very start of your process. 

I make no secret that I feel contempt for my peers who pretend to operate a real estate investing business but their primary source of income is coaching, courses, and affiliate referrals, and I want to state clearly here that I don't nor have I ever gotten paid for teaching someone else how to make money