Refi on a rental, want to make sure I dont make a mistake

1 Reply

I searched the forums and a majority are about seasoning and if you can/cant refi a rental. So this is the situation I have in front of me. 

I have a rental property in NC, I owe 35K on it and it appraises at 82K. I have had it for a year now. I found a mortgage company that will give me a 30 year fixed mortgage at 75% of the assessed value giving me $23,500 cash out (this does include having the closing costs taken out as well.) The property rents for $800 a month, the previous payment was $300 a month and now the new payment will be $445 a month. Minus HOA fee of $80 and management fee of $85 this will leave me netting $190 where before I was netting $335 a month. The intent is to 1)take the cash out and use it to rehab a property that I will purchase with the cash reserves I have already (80k) or 2) use the cash out to put down on 1 or 2 rentals. I am still learning how to invest properly and being smart about it too. Is this a good thing to refi the rental? I just dont want to make a mistake and hope that the vets out there can give me a little guidance.

Thanks everybody!

Originally posted by @Account Closed :

I searched the forums and a majority are about seasoning and if you can/cant refi a rental. So this is the situation I have in front of me. 

I have a rental property in NC, I owe 35K on it and it appraises at 82K. I have had it for a year now. I found a mortgage company that will give me a 30 year fixed mortgage at 75% of the assessed value giving me $23,500 cash out (this does include having the closing costs taken out as well.) The property rents for $800 a month, the previous payment was $300 a month and now the new payment will be $445 a month. Minus HOA fee of $80 and management fee of $85 this will leave me netting $190 where before I was netting $335 a month. The intent is to 1)take the cash out and use it to rehab a property that I will purchase with the cash reserves I have already (80k) or 2) use the cash out to put down on 1 or 2 rentals. I am still learning how to invest properly and being smart about it too. Is this a good thing to refi the rental? I just dont want to make a mistake and hope that the vets out there can give me a little guidance.

Thanks everybody!

 HI Chris,

With a conventional loan you can cash out to 75% of the 82k which is 61,500 - 35,000 you currently - 3k closing for refi = $ 23000 proceeds from cash out.

You'll need 6 months of payment reserves in funds via checking/savings/401k/bonds/stocks/etc.

Is it a good decision? It depends on your skill level but, it looks like you're still cash flowing with the new proposed loan if you're comfortable with it and you have new opportunities you may consider the cash out to move forward with another property.

Hope this helps.

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