Grand Rapids, MI · Member since 2014 · 174 posts · 27 votes
So my first residence I owe about 58k on a ten year mortgage (8 years left) and my payment w escrow is about 850. I'm currently renting it out at 945 and im in the process of buying another home right now as my primary residence. The house is worth 105-110 so my question would be do I refinance and pull the 40k (90% of the equity) and buy a rental w cash or try to focus on flipping to increase my capital ? Go from a 10 year to a 30 year? Pros / cons ? Also, I don't think I'm at the point of potentially having three mortgages (plus my renter has only been there a month so the history isn't there).
Thanks all! Have a great day
@Drew Denham ...It's still a great time to buy, so do what works best to get another deal. Initially I didn't flip, because I wanted to build a solid portfolio. Currently, I'm working to get some flips done..
The goal with investment properties is to make sure that each property can cash flow on their own. You do not want a negative cash flow property to be eating the profits from a better one.
That being said, I would recommend that you create a spreadsheet to analyze each scenario. As it stands right now, your first property is barely, if even, creating a positive cash flow as it stands right now. If you pull out all the equity, your mortgage will be higher and you will have a negative cash flow. Can't see a lender going for that any time soon.
Yes, and then do it again, you'll be limited by the banks once you hit 4 mortgages. Then go to the commercial side of the bank for more but your mortgage term will be shorter.