Cash out refi question

8 Replies

I have an investment property (100%) equity that I'm taking out 70% LTV to pay off 2 additional investment properties' mortgage. My question is once the 2 properties are paid off, how soon can I take out another cash out refi for additional investments? I have over 12 months of cash reserves on all properties combined.

@Crane Xu , some lenders have a seasoning period, where you need to own a property 6 or 12 months to refi. Many do not though. So, you should be able to refi those other properties.

Why not just refi all 3 at once! If you are using the same lender it will make dealing with the underwriting simpler because you only have to provide documentation once for all 3 loans. 

@Kevin Sobilo so even if I owned the property since 2013 I would still have to wait the 6 months after I pay off the mortgage to take cash out refi?

- I'm taking $160k of equity out on cash out refi from property 1 to pay off a combined $160k left in mortgage on properties 2 and 3. Those separate loans cost ~1300/month. On the refi my payment would be ~700/month with no additional debt incurred while now having 2 additional properties at 100% equity. Which I'm then looking to take additional cash out refi to buy cash.

Smarter rental management
Outperform your peers by 71%
NestEgg landlords save $6,960/yr in fees & 20 hrs/mo*. Self-manage for free or go hands-off for $29.
Start now, get $500

@Crane Xu , no after you own a property 6 or 12 months any seasoning requirements should be done.

You may have a prepayment penalty on existing mortgages though. So, if those loans are newer you should check those loans you intend to pay off with a refi.

I don't think you need to think of this as a multi-step process. You could refi properties #2 and #3 first, pay off the existing loans and pocked a little equity and then refi property #1.

I would do all 3 refi loans at once to make the process of getting the loans easier on myself. 

Crane Xu have you considered using a HELOC on the 2 properties you will have free and clear after your refinance?

The closing costs on a HELOC are less and you would only have payments on what you use for the next investment property. HELOCs will generally have 5yr draw period on an investment property (you might find a couple that have a 10 year draw period) at the end of the draw period your investment should've appreciated and you can take another HELOC out on the property to payoff of the old and increase your credit limit.

A great Investment HELOC lender I know of is Quorum FCU. They will go up to 80% CLTV with a minimum credit score of 680.

Best of Luck!

@Torrell Palmason I'm looking to use the equity on the 2 properties to buy propeties cash in TX. Boom in Central TX in next 5 yrs due to Austin being unaffordable and Samsung New announcement of $16bln chip factory in Taylor, TX.

Just did a quick search on Taylor, TX and was surprised you could pay cash for those with the equity you spoke about. If you are planning to go that route @Kevin Sobilo is right to say do all 3 refinances at once so you can get the low fixed rate instead of the Adjustable rate HELOC.

Good eye for trying to get in the area prior to the plant being built there. 

Best of Luck!

@Crane Xu I’m currently doing two cash out refis simultaneously. Saved a little paper work for sure! Making sure your existing equity is working efficiently for you is a good “problem” to have. Congrats on your success. Good luck.