I HAVE TO RENTALS, I WANT TO PULL OUT $80-90K, REFI AND BUY 3RD

1 Reply

2-24-18.

HI BP

I HAVE TWO RENTAL PROPERTIES, I WOULD LIKE TO REFI ONE HOUSE, PULL OUT MONEY OUT FROM ONE HOUSE, AND BUY A 3RD RENTAL PROPERTY.

NOT SURE WHICH RENTAL PROPERTY I SHOULD PULL FROM SINCE EACH HOUSE HAS ITS OWN VALUE AND NUMBERS, ETC..

HOUSE #1,

BOUGHT IN 2001, PAID 217K

VALUE NOW IN 2018, VALUE IS ABOUT 330-340K

BALANCE ON LOAN IS $8500 (ALMOST PAID OFF)

LOAN RATE IS 3.2%, FIXED RATE

AT THIS MOMENT , CASH FLOW IS $541 A MONTH. (TENENTS ARE IN ONE YEAR LEASE TO EXPIRE 1-31-19).

IF I PAY OFF THIS LOAN NOW, CASH FLOW WILL INCREASE TO $897 A MONTH.

I DO NOT WANT TO SELL HOUSE.

HOUSE # 2

BOUGHT IN 2014, PAID 220K

VALUE NOW IN 2018, VALUE IS ABOUT 335-345K

BALANCE ON LOAN IS $151K

LOAN RATE IS 4.375, 30YEAR FIXED RATE SINCE TIME OF PURCHASE IN 2014.

AT THIS MOMENT, CASH FLOW IS $200 A MONTH

TENENTS ARE MONTH TO MONTH, HAVE BEEN THERE FOR 15MONTHS,  I DO NOT WANT TO SELL THIS HOUSE.  

MY TWO PART QUESTION TO BP MEMBERS, WHICH HOUSE DO I BORROW FROM,

I NEED TO PULL OUT $80K-85K TO BUY 3RD HOUSE.

  • 1. DO I BORROW FROM HOUSE # 1 AND PULL OUT CASH, BUT MY NEW INTEREST RATE WILL RISE TO ABOUT 4.5% (FROM 3.2%)

2. BORROW FROM HOUSE # 2, PULL OUT CASH BUT MY NEW RATE WILL RISE TO ABOUT 4.5% (FROM 4.375%). 

 I WILL PULL OUT 90K AND TAKE $8500 AND PAY OFF HOUSE # 1,

THEN TAKE REST OF CASH AND BUY 3RD HOUSE WITH LEFT OVERS ABOUT $83K ?

WHAT AM I MISSING, WHAT SHOULD I THINK ABOUT,  I AM NOT INTO EXCEL CHARTS, AND CRUNCH NUMBERS, NO IDEA ABOUT THAT.

I AM LOST AND CONFUSED, ANY TIPS I WILL APPRECIANTE FROM BP MEMBERS !

THANKS

ELIAN

I would pull it from house #1. Because it is paid off the property is deep into negative cash flow from the property turning your asset into a liability. The only income source on the property is your own cash/equity at a very poor rate.

Neither property is a real winner but #1 is terrible based on the dead equity earning next to nothing. You need to get your money out of the grave and make it earn it's keep.

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

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.