Cash out refi on 10 properties?

Question

I have 10 doors.  I have lots of equity in all 10.  I’m in the process of doing a cash out refi on 5 of them, to pay off the other 5. My goal is to free up 5 more mortgages in my name.  This will increase my payments on the remaining 5 by about $250, but I’ll still be cashing flowing about $300 per door.

Now, I’m thinking why not do more cash out refis in the remaining 5?  I would have a huge chunk of change for future purchases.  Would I be over leveraging myself too much?  With all 10 refi-ed, I would still have positive cash flow at the new higher payments.  And then I could do a portfolio loan to buy more properties, since I would still have 10 personal loans.  Is it better to have lots of cash available versus paying off half the properties?

Good or bad idea?  How would I get I to trouble in this scenario?

Leah Slaughter · Answer

Leveraging (within reason) is how you build an empire. There are blanket portfolio cash out loans that would be a great option and that would open back up 10 doors to go do 10 more Fannie Mae loans. Call Chris Hamilton at Origin Bank. He is amazing.

AJ Singh · Answer

@Chris Hill

this decision is painful to say the least. I am in the same boat. To open up ten more loans by doing a portfolio loan or start paying off the rentals one by one.

As rentals are aging, the maintenance costs are increasing as well. so having debt free properties does give the cash flow chunk to do deferred repairs without worrying about mortgages

Chris Hill · Answer

Awesome thanks for the replies!  Makes sense to me.  However my biggest issue now that I’ll have cash available is that pricing for sfr or multi fam in my area produces zero cash flow.  Prices are ridiculous, so I’d be paying interest on the cash out because I don’t have anywhere to put it.  I’m not comfortable enough yet for oos.  How do I get the courage to do oos or turnkey?  I look at Kansas City, Memphis, etc that everyone talks about, prices are great, but I just hear horror stories...

Eric Mayer · Answer

Seems like a no brainer to me. That’s how the rich get richer. That or selling and 1031 exchanging into bigger deals.

Joe R. · Answer

@Chris Hill - I think it depends on your short term income needs and risk appetite. If you don’t need the income coming in and are ok with levering to expand then you are gonna be fine. Also, if cash flow is remaining positive then you are mitigating some risk there.

Cash out refi on 10 properties?

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