How much cash out would you take?

[Shea Spinelli]

We purchased a rural, small multi-family (12 units) in July of 2017. We added 3 units (to 15) and made some minor changes. These have increased our value by 75% through forced appreciation and buying it right. Along with the pay down of the loan, we have enough equity to refi cash-out and invest in additional properties while continuing to stabilize our current property through increased rents, utility billing back and additional units.

Question: Currently, we have an owner-financed loan at 4.6%/20 year 5/1 with a balloon 07/2022. We are approved for 6%/20 year, 5/1. With rates rising and being able to take cash out we would like to move now rather than in a year or two. We can take out about $175k, but that brings our cash flow to $0. This is out of the question. I have been trying to decide on the right mix of monthly cash flow and cash-out.

Does anyone have any experience they'd be willing to share? Thoughts? 

Thank you.

[Mike V.]

Take it all out. Every last penny. Use it to finance a new deal. Whatever you ‘lose’ from the first property, the second will more than make up for it.

Think of it this way; you will own a house for ZERO out of pocket. Who cares if it cashflows or not.

New property will cash flow and that cash flow is free money.