Financing paid off properties ?

Question

Hey guys, I’ve been building a portfolio for a few years of commercial and residential properties, it’s been goin great so far until I feel like I’m running out of cash to buy new ones, currently I’m flipping some properties one at a time to make money to buy more rentals, my problem is when I’m done rehabbing I feel like I want to keep them and rent them out! Everything I have is paid off! What’s the best way to pull my money out of them ? I wanna buy a big multi family project!

Stephanie P. · Answer

Rates have come down a little since this post first came out so you may want to look at a cash out refinance.  I don't believe DSCR would be the right way for you to go on this until you've exhausted all of your conventional options (and I'm a DSCR broker/lender).

Carlos Scarpero · Answer

DSCR home loan is the way to go on this one. I have options for this. PM me

Alex Hunt · Answer

Cashout refinance is the go to option for this, happy to chat on this!

Brittany Minocchi · Answer

Cash out refi on your existing properties, use those funds to scale. As far as interest rates, you just need to analyze your deals and see if the numbers pencil out. What will your cash flow look like with an increased interest rate? What kind of cash flow and/or appreciation can you expect on your new project? If rates DO come down in the future you can consider refinancing, but don't forget there are costs associated with that as well. Also keep in mind depending on what time of refinance you do, there pay be a prepayment penalty that is triggered when you refinance again.

Terry Ouimet · Answer

Interesting, wow I wish you all the best in your decision-making. It’s not easy. I don’t think rates are coming down anytime soon. Wall Street thought we were going to get six- eight rate reductions this year we’ve seen none so far and stagflation is setting in , the Fed is trapped , if they reduce rates now , inflation could catch on fire if they increase them again too much something in the economy will break I think we’re in this holding pattern for one to two years personally, I don’t claim to be a macro economic expert, but I do study it quite a bit and I’m not counting on or expecting rates to come down anytime soon and even if they do, they’ll just be small quarter-point rate hikes not enough to make a huge difference in cashflow, so ..I either hold and if they do decrease rates, there will  probably be another asset inflation bubble, which will increase my appreciation, or my cell and deploy the capital more wisely and look for some market softening and buy a good deal

Zaid A. · Answer

I’m actually thinking the same exact thing, interest rates are too high to tap into equity, I’m thinking of selling a couple of my properties and buying a multi family with high ROE honestly that’s what’s been on my mind as my best option in the last few days! Will interest rates go down ? Hard to tell! When ?? That’s the real question

Terry Ouimet · Answer

I feel stuck in a similar situation, I have $1M in equity in this house that I’m living in and renting the mother in law apt next to it , the problem of course is the 7-8% interest rates , have they not stopped the BRRRR technique in its tracks ? And are cash out refi’s at an all time low? I don’t know but would love to hear some feedback, everybody’s market is unique , I’m in Colorado…unless you make a big undermarket buy when you  refi (possible but not easy in this  market )  how else can you tap into equity , scale up and cashflow ? I’m thinking of selling while prices are still high , and paying cash for a multifamily or 2 separate properties to get a better ROE than I have now, however .. if I’m patient rates will come down in a couple years , not to 3% , but perhaps that’s my better strategy , then I don’t have to sell and pay capital gains, I can rent this place out & buy another with a refi at 5-6% is my guess - thanks !

All the best

Katie Smith · Answer

Hi Zaid! It sounds like you need to do a cash out refinance on your investment properties. I am going to send you a dm to get more information from you! I would be happy to take a look at your deals and send you a few quotes.