Flipper/Rehabber · Gresham, OR · Member since 2018 · 9 posts · 3 votes
Please help! I worked really hard on my first multi family property and created a lot of equity but also was able to lock it down on a 30 year mortgage at 3.25% apr. I’m not sure if I should refi and enter the commercial world of finance and pay a higher interest rate with the unknown of future rates and having to be forced to refi every ten years. If anybody has creative ideas to get some of my equity out and still keep my loan please chime in. The banks will not do a second on a commercial property. Thanks in advance
Rental Property Investor · San Diego, CA · Member since 2018 · 242 posts · 234 votes
7y
@Brian Stevens
Consider selling the 5 plex and doing a 1031 exchange and buying a 10-20 plex.
You can use the $300k+ in equity as your down payment and you roll into the new property tax free.
I sold 1 condo in San Diego and traded for a $1.3 million 14 plex in Kansas City MO about 6 months ago. I’m now getting $3000 per month positive CashFlow and my tenants are paying off my $1m loan at $2500 month. Plus application, plus tax Benefits.
I did the same thing 2 other times in the last 9 months and now own 26 doors.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
7y
@Brian Stevens have you run the numbers to see how much cash flow you would generate on the equity?
I keep running the numbers for my situation and it is basically the difference between the cap rate at which you buy and the interest rate. So maybe 1%? Of course this does not take into consideration, rent increases, loan paydown, appreciation, etc
Flipper/Rehabber · Gresham, OR · Member since 2018 · 9 posts · 3 votes
7y
@Mary Mitchell
I have other deals that I’d like to go after, I need some capital to do this. My predicament is that as soon as I refi the property I will be doubling my interest rate and my payment will also go up accordingly. I will be held to a forced refi because of commercial lending. I know I will be ahead in the long run because I will increase my cash flow and I will add equity to my portfolio but I’m also adding more risk and more work to my life. I guess I’m just thinking out loud now. I should probably just look for outside financing and let the 5 plex soak. I love bigger pockets because a lot of us probably know the answers to our own questions but it’s hard to see them until you write down your question. Thanks for your response.