After stabilizing a apartment.... now what??

6 Replies

My question is growing my portfolio... we purchased an apartment complex about two years ago and we are now at the point where we are seeing good cash flow, we have increased the monthly rent from 11k to14.5k monthly. I’m unsure about how I could utilize this increase in value to gain access to new capitol to buy another property. Any advise on next steps would be great. Thanks

@Matthew Fitzgerald congratulations 🎉🍾

No it’s the time to decide what you want to do with this great asset.

1) roll with it and pay it off.

2) sell the property.

3) refinance the loan to better terms.

a) if you hold more properties consider a portfolio loan (one payment, cash out larger amount)

4) cash out refinance

a) buy more properties.

b) rehab property (if needed).

c) use the cash to upgrade to a LOC, and accelerate your property acquisition.

@Eric Mayer and @Guifre Mora have answered your question.

1.  Refi and pull some cash out; or

2.  Sell thru 1031 so you defer paying the taxes

How do you decide between the two?

Do the numbers!

Let me give you an example: let's say you, your building is now worth $1M and your existing loan is $500K. If you refi at 75% LTV, you get a new loan for $750K to pay off the existing loan and now you have $250K (less closing costs) cash.

If you can sell, you'll get $500K cash (less closing and selling costs).

Do you have a property lined up (or can get one) that will more than replace the cashflow from this building and give you a good cash on cash return? If so, then selling could be the answer. If not, and you like your existing building, refi your cash out and buy another building with it (assuming cashflow is still good and you have enough operating and capital reserves).

@Matthew Fitzgerald you can either refi to take out the equity and deploy it into another emerging market or possibly get a supplemental loan if the refi wouldn't be the best option. I have a few referrals that may be able to assist with this. Inbox me.

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