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Is it recommended to pull money out of a flip house

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Yaz Bajric

Caledonia, Michigan

Jan 18 '13, 05:51 AM


Hi everyone my name is Yaz I have been reading the biggerpockets forum for about 6 months but this will be my first post. I primarily do fix and flips and currently I have a house that is 2 weeks away from being put back on the market. Has anyone pulled money out of their fix and flip homes to purchase the next property? The house was purchased cash for $30K and I invested $12K in rehab(all cash). The ARV on the house is $80,000.

If I pull $30,000 out will this in any way affect me when I sell the house. I understand the bank would have a lien on the house for 30K but does this look suspicious to the buyer.



Sebastien B.

Real Estate Investor from New York, New York

Jan 18 '13, 05:56 AM


Why pull out money to flip anyways? Seems silly.

Either hold the asset and refinance, or just sell and repeat the flip process.



J Scott Moderator Donor

Real Estate Investor from Ellicott City, Maryland

Jan 18 '13, 06:18 AM
1 vote


When I get loans again properties, this is generally how I'll do it. I"ll pay cash for everything, and then if I need more cash during all the renovations to by more properties, I'll refinance one of the properties to pull out cash. This way, I only pay interest if I really need the cash and have another opportunity that is clear more lucrative than the money I'll spend on the extra closing and the interest...



Medium_lishproplogoJ Scott, Lish Properties, LLC
E-Mail: [email protected]
Website: http://www.123flip.com
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Yaz Bajric

Caledonia, Michigan

Jan 18 '13, 06:43 AM


J Scot thanks for your input you knew exactly what I was trying to do.



Huggy Baird

Lakewood, Ohio

Jan 20 '13, 09:17 AM
1 vote


Originally posted by J Scott:
When I get loans again properties, this is generally how I'll do it. I"ll pay cash for everything, and then if I need more cash during all the renovations to by more properties, I'll refinance one of the properties to pull out cash. This way, I only pay interest if I really need the cash and have another opportunity that is clear more lucrative than the money I'll spend on the extra closing and the interest...

This is sound thinking when the opportunity cost is greater than the closing costs and interest on the refi. I'd offer a couple thoughts Yaz should factor in:
1. Banks lend 70% ltv on the purchase price (not appraisal) if you held the deed less than 12 months. For your $30 home you'll only see $21k in a cash out refi.
2. It will take up to 30 days to get that $21k through underwriting. By that time you may have sold the home and be a week away from closing



Aaron McGinnis

Real Estate Investor from Atlanta, Georgia

Jan 20 '13, 04:38 PM


Seconded... when I borrow money, that's how I do it...

Making financed offers on property just hurts your odds in a competitive marketplace, and slows down the whole process. Better to buy with cash, rehab with cash, and only pull cash out if you have an immediate use for it.



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