Should I Cash out Refi?

[Jon Maroni]

Hi BP community. My wife and I are considering a cash out refinance of our first rental we purchased in 2014 in order to help us purchase an additional property, I'm Looking for advice. 

Here is what the mortgage on the property looks like and what it would look like if we chose to pull the trigger. We are looking at a refinance of the whole first mortgage. If you know of a lender that would do a second or HELOC on a rental pm to let me know.

Based on a market valuation the home is currently worth $105,000, we paid $74,000 for it. Of course we could order an appraisal and find out this isn't worth doing but lets go with it. 

Current Mortgage: 4.75% interest, $57,812 remaining balance, current payment (including taxes and insurance) is $651.48. The home is rented for $1350, minus property management expenses it gives us $563.52 per month (I haven't factored in other expenses, trying to keep this post simple). 

Potential Refinanced Mortgage (we've gotten quoted info from our normal lender): 5.625% interest,  $84,000 balance (so lets say we get $25,000 cash out), payment goes to $816.23 so cash flow would decrease to $398.77 and would allow us to purchase an additional property that is my estimation could make up for the lost cash flow. 

What would you do?

[Mike McCarthy]

I’m not sure a $25K refi is worth it in my mind. You’re going to pay $4-5K I’m closing costs, plus your rate is going up. For $25K, you could probably find a loan, low-rate credit card, or something similar. It just doesn’t seem like enough cash in your pocket for the hassle and higher rate. Just my $0.02