Am I putting the cart before the horse?

2 Replies

I just signed initial disclosures and submitted all documentation for a cash-out refi on a single family property I bought one year ago. I'm expecting the property to appraise for 70k and take out 75% LTV for a total of 52k in cash out. My plan is to use this money as a down payment for a small multifamily. I'm going to look at a 3 unit property this afternoon asking price is 90k. My numbers say it would be a good deal at the asking price + 20k in renovations/closing/vacancies.

If I like what I see today I'd like to make an offer. Am I being too aggressive considering I don't have any guarantee that the cash out refinance will go smoothly? Even if the single family only appraises for 50k it would give me enough cash for 25% down on the 3 unit, but there is always a chance the cash out refinance could fall through all together. I only have 10k in personal savings I could use for this deal, not enough for the down payment. I don't want to let a good opportunity slip through my hands but I also don't want to act irresponsibly.

Could you go thru fha to purchase multifamily property? That way you would not have to put down the 25%. 

I am looking into refinancing my house to get it out of an fha loan. Then i can purchase a multifamily under an fha loan & house hack it, and not have to put down the 25%. I am very interested in others input about doing this & I really hope it works out well. Keep me posted on how this all goes. 

Josh, I would consider having your lawyer add a clause to the contract creating a contingency for your cash-out refi.  It would be a bit unusual, but in theory not much different than a contingency that your house must be sold first.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here