Burlington, Ontario · Member since 2017 · 17 posts · 4 votes
Hello everyone,
Wanted to get some inputs on what would you do if you were in my position. Couple years ago I bought a pre construction condo and have it rented out I made good equity on it and the market appreciation in the area is strong it’s in ( Grimsby, Ontario) not sure if many will know where this is in Canada but it’s in the Niagara region. as for the rent part I’m pretty much breaking even on it. although the appreciation on it would be great i feel like I could be investing my money better maybe purchasing a Duplex or triplex using the brrrr strategy?
I could refinance the condo since I have good equity in there already but not sure how that would look when I’m not cash flowing through it. Also being self employed during these times we’re in I think it wouldn’t be easy maybe I’m wrong
Investor · New York City, NY · Member since 2014 · 289 posts · 374 votes
5y
I wouldn't refinance if you'll end up with a property that doesn't cashflow. You'd better have a really good use for that money before pulling it out. I'd be more inclined to sell and put your equity towards a larger building.
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
5y
I wouldn't refinance unless you had a plan for that money (i.e. to invest in a higher cash flow area). You might want to consider looking for a HELOC as then you could quickly tap the equity and use it to invest in another property if one comes up. Or, if you know you want to find another investment property in the near term future, refinancing would make sense.
I tend to think of cash flow as the cherry on top and so I would be hesitant to sell and then find another property with higher cash flow. It will take a long time for that higher cash flow to make up for all those transaction costs.
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
5y
@Nino Novak What are your actual cashflow, COC, and ROE numbers? Let's look at this mathematically. Andrew has a great point too. If you don't have a higher and better use already for the equity, it may not be the best time to refi. You have a property with equity and it is cashflowing. In this market, that is a well-protected asset. If you strip the equity and it no longer cashflows, you may have done yourself a disservice. Post your numbers and let's look!
Burlington, Ontario · Member since 2017 · 17 posts · 4 votes
5y
@Andrew Syrios makes sense I see what you’re saying about the closing costs and all that. I definitely want to use the equity I have in the condo to buy another investment property sooner then later
Investor · New York City, NY · Member since 2014 · 289 posts · 374 votes
5y
I wouldn't refinance if you'll end up with a property that doesn't cashflow. You'd better have a really good use for that money before pulling it out. I'd be more inclined to sell and put your equity towards a larger building.
London, Ontario · Member since 2018 · 104 posts · 38 votes
5y
@Nino Novak
How long have you been self employed? I would tend to think selling and finding a better cash flowing investment would be best.
But you could also open a HELOC on the condo, which again could make you negatively cash flow on this property but could allow you to keep both and cash flow on the whole portfolio
@Andrew Syrios makes sense I see what you’re saying about the closing costs and all that. I definitely want to use the equity I have in the condo to buy another investment property sooner then later
Yeah, it would take a while to make up the 7-8% real estate commission and closing costs in cash flow. I would probably recommend a HELOC if you can get one. Good luck!