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Danny Banda
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Investment property refinance

Danny Banda
Posted Jan 7 2023, 11:37

I have one investment property looking at taking equity out. Currently have $150,000 equity built up. I have done spoke to some vendors offering 75% LTV offering 100k in getting cash out. My goal is to buy a second investment property. I'm stuck in the next step do people normally take that 100k use it for a down deposit for the next property but than that means, a separate mortgage will be needed to complete that or just try to find a property near what getting out of my property which is 100k

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Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
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Kevin Sobilo
  • Rental Property Investor
  • Hanover Twp, PA
Replied Jan 7 2023, 13:03

@Danny Banda, first off 75% of $150k would be $112,500. So, you may be able to get a bit more than $100k out on a refi unless you have an existing mortgage that would possibly lessen that a little.

If you are in an expensive market or if you intend to purchase a larger property that refi money might be a down payment and closing costs.

What is your strategy for growth? It sounds like you are talking about straight forward "buy and hold". Buying a rent ready property at retail market price and managing that property usually with a focus on cashflow. If that is the case then yes what you describe is exactly the situation and your path to more and more properties will be largely in working to maximize that cashflow until you have more down payments saved.

There are other strategies such as BRRRR where you buy distressed properties and rehab them into rentals. That would be different than what you are talking about.

The first thing is to decide on what strategy(ies) you intended to employ for growth. 

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Jason Wray
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Jason Wray
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Replied Jan 7 2023, 13:08

Danny,

First its possible to take out up to 80% cash depending on your investment property’s situation. Once you get the cash I would then take a look at a couple of different programs. If your buying another investment rental you can use a portion of the $100K to put 15% down. No reason right now to put more than that down especially while values are going through a teeter totter effect.

You also have an option to buy a "Second Home" and use an industry loophole to be able to put 10% Down and still use it as an AIRBNB/VRBO. You need to make sure you are working with a seasoned Banker/Loan Officer who can be on the same page with you to ensure your REI goals are met. $100K is a good chunk of change so my advice is do not use all of it as a down payment. Spread it out over 2-3 investments which does depend on price point in your market.

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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
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Nathan Gesner
  • Real Estate Broker
  • Cody, WY
ModeratorReplied Jan 8 2023, 05:38
Quote from @Danny Banda:

Will your investment still cashflow after pulling out equity? Be careful that you don't over-leverage and dig yourself into a hole.


  • Property Manager Wyoming (#12599)

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Mark Munson
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Mark Munson
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Replied Jan 9 2023, 06:23

Danny, if the property is in Charlotte, it may qualify for an 80% LTV cash-out refinance, assuming the DSCR works. Everyone's real estate goals and strategy is different, but assuming you are accessing the money to scale your portfolio, then I'd use a portion of the proceeds as a down payment on the next purchase. That way you aren't locking up all your liquidity in one asset and you can buy more properties by leveraging the $100k. Happy to connect and help if I can (I'm a vendor at the Charlotte REIA, mortgage company). Good luck!

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Tanner Dahl
  • Real Estate Broker
  • Charlotte, NC
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Tanner Dahl
  • Real Estate Broker
  • Charlotte, NC
Replied Jan 9 2023, 09:41

@Jon Puente