When to refinance and what to do with the money?

2 Replies

1. When to refinance?

2. What would you do if you where in my shoes, as far as refinancing?

3. Is there a set amount of time I have to have my units rented before I should refinance? 

I have two properties and four loans: 

My personal house is worth around 300k I have a mortgage for 120k and a HELOC for 120k that I used to remodel my personal house and my duplex. 240K total owed = 80% LTV. Monthly Mortgage payment including PITI =$1,200 on a 30 year loan at 3.75%. Monthly HELOC payment =$1,200 on a 20 year loan at 5.5%.

My duplex is worth around 300k I have a mortgage for 150k and private loans totaling 50k. 200K total owed = 67% LTV. Monthly Mortgage payment including PITI =$1,400 on a 20 year loan at 5%. Monthly payments on privet loans = $500 interest only At 10% these are one year loans that I would like to pay off as soon as possible. One side of the duplex is rented for $2,100 and the other one is rented for $2,400 = $4,500 in total rents.

Our goal is to BRRR the duplex and buy another one.

My thoughts are to refinance the duplex and use that money to pay down/off my HELOC but leave it open that way when I find the next property I can use that as my down payment.


Thanks for your time!

@Casey Walker great questions! 

Unfortunately, I have to answer your questions with a question - what are your goals? I didn't see you mention how many units you wanted, if you wanted to quit your job, build long term wealth, or you're the kind of person that needs a lot of cash in the bank to sleep easy. Your strategy and personal preferences will largely depend on what you do with the refinance money. 

If it were me, trying to build up cash flow, then I would refi the duplex and use that money as a down-payment on another property to BRRRR and repeat the process. If you don't have another property identified (or aren't currently wanting to add properties to your portfolio) then I would payoff the HELOC.

There shouldn't be a set time you need to have your units rented to refi. In my experience, the bank just needs 12 month leases to use the income to help your DTI.

Hope that helps!

@Cameron Tope  Thanks,

Yes the goal is cash flow without exceeding 80% LTV.

I agree with you, "If it were me, trying to build up cash flow, then I would refi the duplex and use that money as a down-payment on another property to BRRRR and repeat the process. If you don't have another property identified (or aren't currently wanting to add properties to your portfolio) then I would payoff the HELOC."

Thanks