I own a property and considering a cash-out refinance

2 Replies

I currently own a property that worth roughly $250,000 and am considering doing a cash-out refinance and I am not sure if that's even the correct path to take. The home is currently being rented for $1750 a month and after all bills paid, I end up with right around $1000 a month (no mortgage).  

My plan is to cash out the home I own and buy a home for my family and at least one other investment property. After talking to briefly to a lender, I was told I could expect somewhere around $180,000 for the home which would be around 980 a month, leaving me with zero cash flow and not ideal IMO. 

I have three big questions, what are my best options without selling the home?

Are their different rates or loan types with different lenders?

What is the ideal cash flow for an SFH investment property?

Hey @Randy Arnold

My first thought is, I would definitely utilize the dead equity sitting in your property. If it lowers the cashflow down too low, why not just leverage the property a bit less? Keep 30,40,50% equity in it?

You could also use a HELOC on it, so as you pay it down, you can reutilize the capital.

@Randy Arnold

Conventional is where you are going to see the lowest rates, and for a rental property - you are required to have a 75% LTV for a SFR based on appraised value.

Using the properties equity to purchase more rentals is a great idea! If you can overall increase your cash flow, by purchasing multiple properties (more than $1,000 by what you mentioned), than it is worth considering, cashing out, in my opinion.

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