Cash Out Refinanced Live-In Flip...Now What?

Question

Hey guys! My wife & I finally finished working on our house we purchased in 2016. We purchased it for $110,000, put around $5000 in rehab into the property, and a month ago it appraised for $154,500!!!! I got a little over $17,000 back.

I inquired on getting a rental property next, only to find out that my debt to income ratio is slightly too much to get a loan through the bank. My car has about $5,000 left on it. I'm paying 365 a month in the car payment.

I was thinking about holding the 17K to help me get a hard money loan so that I can do a deal, but I starting thinking that maybe my first step should be to get my debts down so that I can do deals without the worry of them not getting excepted because of the debt to income ratio. What do you guys think? I'm leaning towards killing some debt since I'll still have some money to use on a down payment.

Richard Sherman · Answer

@Nicholas Smith pay off the car OR sell the car...and NEVER EVER FINANCE A CAR AGAIN!  Save up, pay cash, get reliable but a good value...the best rule of thumb to live buy is put as little of your money into things that go down in value as you can...which is basically everything EXCEPT Real Estate....and maybe stocks...but basically you are only authorized to buy real estate from now on haha..I am half kidding...half.

Pay off the debt, cut the expenses, save money like a crazy person and keep doing what you are doing...Live in flips are one of my favorites....even better, live in flip plus AirBNB for part of the year in a hot market airbnb market

Timothy W. · Answer

I recently started researching on velocity banking. Seems very promising in bringing down your debt. Please do some research on that so help you bring your debt down.

All the best,

Tim