Cost Analysis on a Cash Out Refi

4 Replies

Hi team, first off thanks in advance for all the thoughts and considerations. 

I currently own a SFH near Bend, OR. I've been pre-approved for a cash-out refi at 5.5%, 30 year fixed and will bump my mortgage payment up from $657 to $1050. I'll still cash flow in the SFH with the bumped up mortgage.

My current terms are 4.85% I'll be able to pull out $80,000 cash, which I'm hoping to couple with $19,000 of savings to purchase a duplex in the same market. I feel pretty confident doing an analysis of the duplex and project expenses, which cash flows nicely at $535 a month and a cap rate of 6.3% in year 1, assuming steep cost estimates and market rents. THIS ANALYSIS doesn't not take into consideration the fact that the down payment is costing me 5.5% plus closing costs. 

Here's the question: How do I cost the cash-out refi into my analysis for the new duplex? Would any one look at my spreadsheet? I'm keeping the SFH and the duplex in separate analysis, but curious how other investors analyze properties when they rely on each other for purposes of financing? I hope this all makes sense. Thank you again!  

Hi Daniel,

I just did a cash out refi on my own home with a similar rate so I have cash to purchase a multi family property or to build a SFH or multi family with the help of a construction loan. I’m interested to see what others have to say about your question on how it all adds up.

- Zac

@Daniel Garcia , instinct tells me that you wouldn't "need to take into consideration the fact that the down payment is costing me 5.5% plus (loan) closing costs", because, that's already being accounted for as an ongoing expense against the property that you refinanced!

Anybody, if I'm wrong about that, please let me know here. [I'm not an accountant].

You look to be on the right track. Congrats on your success to date...