Need cash, have 3 properties, which one to refi?

Question

I'll try to provide the numbers you may need to help, but if I didn't just ask. This is not my strongest area in REI. I'd like a little more background knowledge before I talk to the bank.

Property loan information:

• Personal residence, 30 yr fixed, principle owed $120k, value $200-300k, 
• 4-plex, 30 yr fixed, principle owed $68k, value $140k, down payment was $25k, Lender A
• Mixed use 2 commercial suites, 4 apartments, 30 yr variable, principle owed $57k, value $140k, down payment was $15k, Lender B

Goal:

• Finish the rehab on three of the rental units in the mixed use building. $15k
• Invest in another property. $25k

Some of my ideas about this:

• I don't really want to refinance my personal residence because our family budgeting is tight and not intermingled with the business numbers. It is on the table because it might be the best or only option.
• The 4-plex is the most stable, 2 updated units at market rate, 2 units with long-term tenants below market. Gross rent $2350.
• The mixed use is the one that needs work and probably not an option on this cycle. Refinancing this one after the rehab will be a strategy for the future.
• I have about $5000 cash-on-hand.

I was thinking of taking the 4-plex loan to Lender B, which is a local bank, and asking them to refinance the 4-plex.

Thanks for the help BP!

#cincinnati #multifamily

Guifre Mora · Answer

Nathan a few questions before anyone fires away with an incomplete scenario:

• How much do you need to rehab the mix-use property?
• What are the rates you currently have on each A,B,C?
• C is on an adjustable-rate but are you in the fixed years or have you passed it? how many years to the variable?
• C is bringing how much in net rents?
• B is bringing how much in net rents?

Nathan Currier-Groh · Answer

Update:

Waiting on the appraisal. Expecting $160,000 - $200,000, which would meet the target for the cash out @ 75% LTV.

15-year @ 4.75%

.25% loan origination

Nathan Currier-Groh · Answer

I'm assuming that they would do 75% LTV and I would need a valuation of ~$155,000

Do they do their own appraisal of the 4-plex or should I seek out my own?

Would that be done using comparable sales or based on cash flow?

Guifre Mora · Answer

I think your thoughts are correct B to lender C and get the most out of the equity but you might be a little short on the amounts you need.

20K rehab + 25K acquisition you are just on the border on the amount you could take out. It would depend on Lender C fees for closing.

Nathan Currier-Groh · Answer

How much do you need to rehab the mix-use property?

I think $15,000 so let's call it $20,000

What are the rates you currently have on each A,B,C?

A Primary Residence 3.875% 30 year fixed

B 4-Unit 4.625% 30 year fixed

C Mixed-Use 4.5% recently increased to 5.125% (3-year treasury index + 3.5%) 15 year

C is bringing how much in net rents?

$125 Now, -$875 during renovation, $1325 After

B is bringing how much in net rents?

$1225 before setting aside capex