Using private money and refinancing on first deal.. Success stories?
Hi everyone,
I'm starting this thread to get a better understanding on the limitations of refinancing out of private money.. I'm very close to making my first deal and through a fortunate connection I have found someone willing to lend money at a generous rate. However, I feel I need to be more comfortable with the refinancing strategy before I pull the trigger. So, to all of you who have done this, what was the conversation with the bank and the outcome? Keep in mind that I am younger (20), have no credit (not bad credit though, which obviously is worse), and this would be my first property. I'm concerned that whichever bank I go to would be hesitant to refinance because of my age/lack of experience, despite the fact that they would be refinancing a performing asset. I'd like to hear your opinions..
Here would be the numbers, and if you see a problem with my analysis, please tell me.
6 Unit, Purchase Price 290,000
Monthly rents - 4200
PI - 1738
Taxes - 491
Insurance - 266
Maintenance (using 10% of monthly rent, property is recently renovated) - 420
Vacancy - 420
Property Management - 420
Cash Flow - 267.00
Obviously the cash flow is very low for a 6 unit. However, I'm using this as an example. Let's say I refi'ed in a year at 4.5%, the cash flow would grow to $637.
Like I said, my concern is that I would have a hard time refinancing because of my situation. This was a deal I was considering, and I'm more than okay with a low cash flow until I refinance. Basically just looking for the communities thoughts. Thank you!