Cash out Refi to acquire multifamily units advice please!

[Burt Gourley]

Hello investors,

I am seeking some advice regarding jumping into multifamily units. i currently have 2 active rental houses paid for and clear. I am attempting to leverage one property with a cash out refi. I was planning on using it ( assuming I am approved) on another SFR in my area. However after much dwelling on the idea ( because I am new to this) , I wondered if I can cash out refi then use the money to as 2 separate down payments on 2 separate 4-plex units in the Lubbock Tx area. I used to live there and I remember the rental market was fairly hot at the time.

I guess here is where I need my advice, assuming I am approved - how viable is this idea ? Will a bank go for two 30 year mortgages on two separate buildings at the same time? I am hoping to get around $100,000 on the cash out refi. I was hoping to acquire two newer 4 plexes for around 180-185k each - using 50k down on both. 

I appreciate any insight- if there are any lubbock amigos out there- I would love to chat and see what your take is on this idea. thank you!

[Thomas S.]

You would be wiser and far better positioned if you trade up. Sell the SFHs, rather than refinance, and buy a larger multi unit to increase your potential cash flow per door. In the long term you would be much farther ahead by scaling up the number of doors per roof that continuing to purchase/hold SFHs.

Moving away from SFHs sooner rather than later is the smartest move to scale up.