Should I refinance to get cash out for 2nd property.

3 Replies

I have a property at 8% owner finance and I of course want to refinance as soon as possible. Should I refinance what I owe which is 150k or should I refinance at the new value of around 195-200 and use the lump sum of cash to help get another deal together. How much can I get LTV on a refinance. What is your opinion on taking equity out of the property. I am new to this an very open, an guidance and perhaps a referral for the orlando area would be greatly appreciated .

With out going in to a long reply on the property, If the numbers still work and give you a cap rate that you can live with (risk wise) then YES! LTV is depending on the bank 65 to 80% is what we have been avg.

If your credit is good you should be able to cut your rate down to 4 to 5% 

Remember to take in to consideration all your closing fees.  

I did a lot of these ( 20 plus) back in 2004-06 pocketed a lot of cash reinvested all of it back in to more properties. As I look back on it years later, I realized that was a mistake. 

What I should have done then that I now do is, take a % of refi or any deal I close on and put it away and not touch it. It is very important to build a cash base for your future. Along with other streams of income. 

Don't wait till later start now.

Originally posted by @Jacob Olivos :

I have a property at 8% owner finance and I of course want to refinance as soon as possible. Should I refinance what I owe which is 150k or should I refinance at the new value of around 195-200 and use the lump sum of cash to help get another deal together. How much can I get LTV on a refinance. What is your opinion on taking equity out of the property. I am new to this an very open, an guidance and perhaps a referral for the orlando area would be greatly appreciated .

 HI Jacob,

If you have good credit and 6 months reserves you can cash out to 75% if this is a SFR, and like what was previously said if the cash flow/ROI works even with the cash out then you should obtain as much as you can.

@4.625% on 30 year fixed the mortgage constant (prin & int) is .00514 so that means for every $1000 you borrow its a $5.14 per month additional in mortgage payment. Hopefully that helps you figure out if the additional cash out will make sense with your metrics you're using.

Medium new american funding logo  Albert Bui, New American Funding | [email protected] | 949‑514‑5106 | http://albertbui.com | CA Lender # 345453, WA Lender # 345453, TX Lender # 345453, TN Lender # 345453

@Jacob Olivos  leverage is a tool. And like most tools, it can help you or hurt you. Make sure you retain adequate reserves to get through any foreseeable problem. If you have the reserves in place, go for it. As stated above, it is partially a factor of your situation and your risk tolerance. 

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