I have a property that I want to leverage in 6 months to help me buy my next property. If I were to pull out 80% of what its worth, it causes my ROI to go up, but brings my cash flow down. I like to keep my cash flow on my properties above $200 month. After running calculations, my cash flow will come down to $150. Does it make sense to access the funds to buy another property even though it brings my first properties cash flow down?
Well it would bring the cash flow on the refi'd unit down, but you're going to get (hopefully) more cash flow from the next unit you buy, right? So you'll be going from 200 / mo total on one property to *what number* total / mo on 2 properties. Doing a cash out refi will always bring your cash flow down since your mortgage payments will be going up, but it's a great way to access your capital and put it back to work on another property.
thanks @James E. !
Howdy @Kirsten Braddock
Are you planning to use the BRRRR strategy on the new property? If so consider getting a HELOC on the first property versus Cash-out Refinance. Use the money when you need it for new properties. Pay interest only payments. Once you Refinance the new property you will payoff the HELOC loan and have no impact on the original property cash flow. You now can reuse the money for another property. The catch is new properties Cash Flow is reduced with Refinance. If you buy right and plan accordingly then you can still make it work.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.