Should I refinance ?

Question

Hi I'm new member of the biggerpockets,  I have a small house 1600 sqft in the Denver metro area with 344k of equity, I'm looking to buy a bigger house to brrr or buy a small multi family, thank you

Taylor Dasch · Answer

Some more information is needed to decide if it will be a good idea for you. The basics would be : Would your return from the refinance be greater than the extra amount on the mortgage payment? Typically, if you spread out your equity between multiple properties, they will provide a greater return. Your also able to leverage more of the banks money. But be careful about becoming over leveraged. Are you very familiar with your market and the numbers associated with a BRRRR such as rental values, ARV, cost for remodeling? If not I'd recommend becoming familiar with them or find a Real Estate Agent that is familiar with them prior to refinancing. I do think that money sitting in the bank is losing more and more value every day.  But thats not a good reason to just go buy a fixer upper. You definitely need to know the risks before hand.

Justin Phillips · Answer

Generally anytime you can minimize trapped or lazy equity, it's a win. My wife and I wanted access to our equity, but didn't have any immediate use for it, so we ReFi'd into a very specialized 1st position LOC. It's tied to a zero balance sweep checking account, so all regular deposits/idle funds sit on our balance and save us interest cost. When an investment opportunity arises, we simply write a check from our line and put that equity to work. It's a tougher loan to qualify for, but a great mix of cashflow increase and long-term flexibility for those who it works for!