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Investor Financing Podcast

Jun 17, 2021

Delayed Financing, Defined:
Delayed financing is a method for getting a mortgage after you’ve purchased a piece of real estate using cash. It provides a way for investors to remain liquid and allows owner-occupants to finance a home purchase. Put simply, delayed financing offers a means of purchasing a home in which you pay cash up-front, then quickly obtain a cash-out refinance to mortgage the property. Doing so effectively returns a large portion of the sums you paid to acquire a home to you, which you then can use for other purposes (e.g., savings, investments, renovations, etc.).

Under the terms of a delayed financing transaction, you basically buy a home for cash, then immediately take on a mortgage as a way to reclaim most of the purchase price. This method of financing allows you to both make a more attractive all-cash offer to home sellers (giving them the confidence that a transaction will close), then put money right back in your pocket. Via delayed financing, you can use a cash-out refinance as a means to obtain a mortgage and enjoy the flexibility of making long-term payments over a period of time so as to avoid tying up all your savings in the home.

Cash buyers should be advised: If you’re seeking to obtain delayed financing on a property purchased in the last 6 months, you can take out cash immediately without waiting. Otherwise, if you buy a home using a mortgage instead of paying with cash, your name is required to be on the property’s title for a minimum of 6 months before you can take out cash and refinance your home.

An important tool in real estate investors’ arsenal, just over one-third of all home purchases are now all-cash deals, as these transactions help keep investors more liquid so that they can buy more properties.

Rehabbers: Some buyers are interested in purchasing properties that are currently uninhabitable or in need of extensive work with an eye toward rehabbing them either to live in themselves or rent out at a profit. These individuals are known as rehabbers. Note that financial lending institutions will not offer a mortgage on an uninhabitable home, no matter its potential, making rehabbers among the most frequent cash buyers.

If you'd like to meet with Beau to talk financing, book a call here )