Cash Out Refi Question

[Taye N.]

I purchased a Duplex for $574,000, It currently Rental income was A=unit 1100, B=1150 total: $2250

I remodel both units and rerented with a 2 year lease. A=$2100 and B=2100 total $4200.00

So basically I almost doubled the rental income.

I had put down 25% percent because it was not home owner occupied, Down payment = $143,500

Repairs and remodel cost for both units about $30,000 totaling around $180,000 on my HELOC.

I would like to do a cash out refi, to pay off my HELOC, however since it a duplex, I dont know ARV.

1.How much would my house need to appraise for me  pull most of my money back out? my bank only does 70 percent non-owner occupied. Does any know of any banks or loan companies that does 80 or even more with good interest rates?

2. Since I doubled the income does it increase the value of the property? The place is cash flowing, about 350.00 a month.

3. Does duplex use the income approach? or is it still comparable?

thanks!

[Jared Bouzek]

@Taye N. The maximum LTV on a cash-out refinance on a 2-4 unit property is 70% with conventional financing. If you find something out there higher than 70%, it's not a conventional mortgage so likely doesn't have the nice rates & terms that are usually associated with conventional loans.

Conventional appraisals on 1-4 unit properties will use the Sales Comparison approach, so even though you've nearly doubled your income, you're still going to be bound my recent comparable sales. That's not to say you haven't increased your value through remodeling. It just still needs to fit with the comparable properties.