I'd like to refinance my house to pull out cash for a couple rental properties (or just one). If I refinance my house it'll add $171 a month to my current mortgage plus closing cost to refinance. That being said, it'll give me $40K to invest for a down payment or a large portion of it. One house is selling for $70,000 while the other is $60,000 and they should each rent for $850-$900.
After the down payment, the loan amount (p&i) will be $284.00 a month for the $70,000 and $243.00 a month for the $60,000 home.
Would this be dumb to do or is it a good decision?
Lender · Mokena, IL · Member since 2014 · 1k+ posts · 261 votes
6y
Do either of the properties require rehab? If so what is the estimated rehab cost and after repair value? What are the annual taxes and insurance? You may be able to use the brrr method and get your money back out of these 2 deals, and still cash flow a decent amount after adding an additional $171 to your primary mortgage payment. If this is the case, you may be able hold on to your 40K as cash in the bank or recycle into the next property. When I make an investment, the last thing I do is leave cash in the property or if I do it's a small amount. I look for deals where I can use the brrr method to get most of my original down payment and rehab funds out of the deal when I refinance.