Need advice. Have the clear deed to my first duplex.

5 Replies

Here we go, my first post.

I closed on my first rental property on Dec 31st. A brick duplex in decent shape. Only paid $40k for it.

Paid cash with both sides rented for $625/month. That is correct, this 40k property is throwing out $1250 a month, minus 10% property management fee, $57 month landlord policy State farm and $125/mo property tax. I paid cash from my savings and have clear deed and title. I formed a single member LLC with the Sec of State for $110, hired a CPA and the first of January came and both tenants paid their rent on time. I work a regular job and so does my wife, I have a 700 + FICO score. I have found my next property and need to pull $20k out of the first property to buy it. What is the best route to get $20-25K out of my first rental? Refi w/cash out or equity line, I own it free and clear? Who will do it the fairest and simplest without me being in the rental business for less than 2 years?

Thanks

@Eric E.

What state is the property located in?
What is the value of the property?

You can choose to do a HELOC or a cash-out refinance.
Be mindful that not many banks do HELOC's on investment properties but they are out there.

I would choose to do a HELOC over a cash-out refinance.
There are pro's/con's for doing both so you want to educate yourself on them.

Also, not many banks touch loans below $40,000 so you may have more options if the value of the property is above $40,000.

Property is in Columbia, SC

Can you deduct the interest on a HELOC? I know you can on a refi and I am thinking if I can get money out of the clear deeded duplex, it would give me the down payment for the second property and also give me interest deduction which I do not have since I paid cash. Who are these banks that do HELOC on rentals or may do a refi? I cant find them

Thanks

@Eric M. did you ever find a lender for that?     I have 60 k (valued) rentals with great cash flow, and find it nearly impossible to refi one at a time.  i useally have to bring a handful to a local bank, and do them all at once.