Need Advice on the Best RE Financial Strategy for an 8-family in New Jersey

[Orkeem Davis]

Hello All,

I have an 8- family apartment building in New Jersey and I currently owe 600k and it has recently appraised at 900k. I have and continue to work on different CAP X Improvements, including new roof shingles, new windows, new sliding doors, landscaping, new appliances, and more. Currently, I have a 5-year ARM interest only loan and I am clearing over 6k monthly after the mortgage is paid.

I decided on this loan product because I wanted to have more cash on hand and the option to pay down the mortgage quickly. Right now, I am trying to decide if I should focus on Forced Appreciation and get the value to 1 million - 1.1 million, pay down the principal, or both? After the 5-year ARM ends, I could realistically be in a financial position to pay off the 600k in full or pay down the principal significantly. Should I refinance to a new 5-year interest only loan and continue with a lower payment? Or do a Cash-Out Refinance with a 30 year-rental loan w/ PITI? Or HELOC? All advice welcome. Thank you.

[Michael Diossa]

Initially, I would focus on enhancing the property to increase its net operating income (NOI) in the short to mid-term rather than using funds to pay down the loan's principal. This approach would allow me to have more cash reserves in the next two years and potentially make further investments to expand my portfolio. Additionally, if interest rates decrease in the future, I could consider refinancing the property to access more cash while also having increased the NOI. In summary, there are several options available to consider.