best way to pull cash out of rental?

Question

I currently have one rental property that has about 70k equity (worth 170, owe 97). I would like to start building my portfolio by adding some small multi-family units and will need to pull the cash from here to do so. I would love to hear thoughts on the best way to do this. Home equity loan? Refinance? We currently have a 3.25 interestest rate and cash flow about 400 a month from this property. Thank you in advance!

Jay Hurst · Answer

The "best" I guess is in the eyes of the beholder but your best rate would be to do a first lien cash out refinance on the non owner occupied property. The rate would go up but still in the mid 4's on a 30 year and high 3's for a 15 yr fixed assuming credit scores are good. Second liens on non-owner occupied properties are tough to come by.

Andrew Postell · Answer

@Brittany Ware the lenders that are here in our area that offer Lines of Credit on investment properties will either require to be in the 1st position on the home or have a significantly higher rate. I would also recommend doing a traditional cash-out refinance because that rate will be fixed. If you don't have a plan to pay that Line of Credit back, the rate will start adjusting and after 10 years it will "mature" into a different loan entirely. If you are looking to buy and hold your next properties then a fixed rate cash out loan would be the most appropriate action. Feel free to ask more questions if you need. Thanks!

best way to pull cash out of rental?

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