Hi Everyone - nice to meet y'all.
My wife and I bought about 14 months ago.
We purchased a 2 family property for $360,000 with an assessed value of $419,000 using an FHA - We rent out one unit for $2250 and live in the other one. Our mortgage is $2650. When we buy the next unit - we will be able to rent ours out for $1500. We will potentially take in $3750 a month on this property and will have about $3000 in expenses.
After the first 14 months the loan is down to around $352,000 - I am correct in thinking I have a 17% LTV? (or maybe the inverse)
With all that being said - I am looking for the best way to proceed in financing the next property. I could probably access around $10,000 in cash by December. I have a retirement account worth $70,000 - but I would have to leave my job to touch that.
Can anyone offer me any advice, direction or support on a new property path or thoughts on the one I currently own.
You are incorrect on your LTV. Loan = 352000 and value 419000. Your LTV is 84% (352/419). With that LTV you would not really be able to take any of the equity out of your current property. If you are going to live in the next property you will only have to come up with about 5% of the purchase price if it will be owner occupied. The strategy you must use to purchase is going to heavily depend on the value (purchase price) range of property you are trying to acquire.
Good job on the house hack though!
confirming @Steven D. is spot on.
@Steven D. Typically what does the LTV need to be at before one could look at refinancing?
@Edgar Perez For a Cash out refi most lenders don't really like to go above 75%. Every lenders different and I have heard of 80%-85%, but generally you are going to max out at about 75%.
@Steven D. So for easy numbers say a residential property is valued at 100k and that was purchase price and I put 10% down loan is at 90k. I would need to pay off about 10-15k before I could consider refinancing? (Obviously this example is very similar to a situation I am in)
@Edgar Perez I think you are confusing ability to refi with available money to pull out (equity) of your property. You can refi to change the terms of your loan (lower interest rate, remove PMI, lots of reasons) for you primary residence under different circumstances then doing a cash out refi.
For a cash out you are looking to get money to use toward something else when you refi. In your example your LTV would be 75%-80% which would leave no money to be taken out. Refinancing up to 75-80% means that if you only owe 65k in your example, you could refi to 75% LTV and then get 10k minus costs to use for something else.