Is the cash out refinance worth it for me?

[John B.]

I have a duplex Ive built some equity in. Would it be worth it for me to go from a 6.5% interest rate to a 6.87% rate if I could get 50k in cash out after all closing costs etc? This would bring my monthly cash flow to almost nothing due to the larger loan. Thats not including vacancy/repairs etc. I have the opportunity to make 3% per month  on other PML investments. I could also look into buying another rental with the cash out proceeds. I know many investors do cash out refi's for down payments on other properties, Im just a little nervous bringing my cashflow to basically 0. Any advice would be appreciated. 

[Jay Hurst]

Quote from @John B.:

I have a duplex Ive built some equity in. Would it be worth it for me to go from a 6.5% interest rate to a 6.87% rate if I could get 50k in cash out after all closing costs etc? This would bring my monthly cash flow to almost nothing due to the larger loan. Thats not including vacancy/repairs etc. I have the opportunity to make 3% per month  on other PML investments. I could also look into buying another rental with the cash out proceeds. I know many investors do cash out refi's for down payments on other properties, Im just a little nervous bringing my cashflow to basically 0. Any advice would be appreciated. 

Maybe look at a LOC second mortagge to keep your first mortgage in place. That way if you are lending your funds as you mentioned above at 3% a month then you can pay down the line if you do not have a project to lend on, then repeat by drawing down when you. Yes, yuo will pay more then 6.875% but you will not be paying anything when you do not need it.

Also, if you run out of investments to fund you can pay off the line and close it, On a cash out refi, you cannot do that unless you pay off the much larger full balance.