Can I pay all cash and THEN refinance into a mortgage?

I am interested in an 8 unit apt. building where the owner is willing to give me a steep discount if I pay cash.
Can I pay cash to receive the discount on the purchase but then immediately re-finance into a mortgage or is there a seasoning period involved? Thank you all for your help.
In Buying Property - Asked by Jacob C. - Nov 20, 2008
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Answer(s)

Rose H.
Owner/Investor
North Hills, NY

you have to wait 90 days

Nov 20, 2008
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Ian J.
Broker/Agent
Ocala, FL

Jack, make sure you take a good look at the property financials and if you don't know how to do it, get serious advice from a lender to make sure the property will qualify for leveraging. Example: his NOI may be tanking and thats why he wants the cash...if you try to finance now the cash flow problems will be revealed. Or, the NOI will only qualify you for a 60%LTV, therefore you are paying too much. Please seek competent advice on the analysis of the propertys financials before commiting. Find a Commercial Realtor with a CCIM designation in your local area that specializes in Multi-Family for the most competent advice regarding the value and position regarding this property. Good luck.

Nov 20, 2008
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Jacob C.
Owner/Investor
Washington, DC

Ian,
Thank you for the advice. This is my first multi-family transaction and is a step up from buying a single family unit. I searched the CCIM website for a specialist in my area and didn't come up with much. The property seems to be a really good deal but I wouldn't mind some help analyzing the numbers after I put it under contract. I am reviewing the purchase agreement and have included a 30 day due diligence period to inspect finances, physical structure and to make sure an appraisal comes in at the right number.
Who can help me go over the numbers to make sure that they are legitimate? Should I hire a CCIM out of Indianapolis, IN (We are 70 miles outside) to help me vet these income figures? This appears to be a very good deal (almost too good) so I'm trying to cover all the angles. Thank you very much for your assistance.

Nov 20, 2008
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Glen W.
Lender/Mortgage Broker
Atlanta, GA

You have to wonder about the sellers motivation. Make sure you are really getting a discount by looking at both sales comps (very recent) and a conservative NOI valuation. If you are truly getting a bargain, you likely can refinance after 90days, most lenders will value the property at or less than what you are paying. On the web reference below (http://www.fairviewlending.com/faq.htm) look at the section on valuation, focus on DSCR of the property, the income approach, and the sales comp approach. Good luck with your transaction

Nov 21, 2008
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Eric W.
Owner/Investor
Billings, MT

If you have the money to pay all cash, don't skim on due diligence. My company provides phase one site assessments nationwide as wells as environmental insurace for your transactions. We'd love to work with you and your investors to speed the closing process. We get our phase ones completed quickly...not 3-4 weeks. Please contact me at your convenience. There could be a reason why he's willing to accept a lowball cash offer. What does it matter if it's cash or not? A bank check is just as good as cash. If your going to refinance the property after your purchase with a lender, they'll require proper due diligence anyway. Make sure the property doesn't have any issues before you buy. If he sells on a cash basis, he or she understands that more than likely that bank will not be driving the due diligence process and can maybe "get by" and pull as fast one on you.
Eric Wells
406-697-2486
www.pointconsultinggroupinc.com

Nov 22, 2008
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Jacob C.
Owner/Investor
Washington, DC

Would you all recommend I take out a Equity Line of Credit or an Equity Loan on a property paid for with cash? I want a low monthly payment and I just want to take out the cash I have in it. No more, no less.

Nov 23, 2008
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