Long term rental question
I am trying to figure out what my best plan of action is for a property I own. The property is a small 2 bed, 1 bath house. It is an older house and has now been almost completely remodeled. I purchased the property several years ago and currently have invested $30xxx into renovations I started earlier this year. I expect to spend about 10-15,xxx more to finish. Then rent it out for a better rate than previously of course. I have paid out of pocket for this project all own my own so far and have a little bit of costs on credit cards. However, now I am looking to essentially “pay myself back” and consolidate all of that money into a loan. Then have option for other investments. Therefore the tenant will pay the loan every month and shouldn’t have an issue cash flowing. I’m simply trying to figure out which would be the best option as far as a loan goes for this amount. I have another property I’ve considered getting a Heloc to do this. But wanted to reach out to get more ideas for a fixed loan to project for 100% cash flow in 4-5 years. Thank you guys for any help
Most Popular Reply
Once the property is stabilized and rented, your best options are usually a cash out refinance on that home, a small portfolio/DSCR loan, or a HELOC on the other property if the rates and terms are better. The key is to base the loan on the new after-repair value so you're consolidating your out of pocket and card spend into longterm, fixed debt that the tenant services. If the numbers still cash flow under conservative rent assumptions, you've effectively recycled your capital without increasing your workload.