Seasoning requirements can significantly impact real estate investors, particularly those engaging in the Buy, Rehab, Rent, Refinance, Repeat (BRRRR) strategy. Understanding these requirements and how they affect investment opportunities is crucial for success in the real estate market.

When investors seek financing from traditional lenders, they often encounter seasoning requirements. These requirements mandate that a property be owned for a certain period before the investor can refinance it based on its appraised value rather than its original purchase price. Typically, lenders impose a seasoning period ranging from six months to a year.

Seasoning requirements serve as a risk management tool for lenders. They aim to ensure that the property’s value has stabilized and that the investor has a genuine interest in long-term ownership. However, these requirements can pose challenges for investors, especially those employing the BRRRR strategy.

The BRRRR strategy involves purchasing distressed properties, renovating them to increase their value, renting them out to generate income, refinancing to pull out the invested capital, and then repeating the process with the newly acquired funds. Seasoning requirements can hinder this strategy by delaying the investor’s ability to refinance and access the property’s appreciated value.

However, there is good news for investors seeking to implement the BRRRR strategy: some lenders offer financing options without seasoning requirements. These lenders recognize the potential of BRRRR investors and tailor their loan products accordingly.

The absence of seasoning requirements benefits investors in several ways:

In conclusion, while seasoning requirements pose challenges for real estate investors, particularly those pursuing the BRRRR strategy, the availability of financing options without such requirements opens up exciting possibilities. By partnering with lenders who understand the needs of BRRRR investors, individuals can leverage the benefits of this strategy to build wealth and achieve their investment goals more efficiently. At CV3, we have no seasoning requirements and offer cash out refi’s on the property as soon as the rehab is completed!