Best way to do cash out on paid for property to invest in more

[Bikash Chhetri]

I have 2 houses that i bought for cash and now seeing the market I think I can pick new Properties. What is the best way to do this? Cash out refinance or BRRRR? Which lenders are best to use? Thank you in advance.

[Teresia Sayler]

Hi Bikash,

You should shop around potential lenders, but have your properties "lendable".  In other words, have them in tip top shape (at least reasonably habitable) so your lender appraisals come in as high as possible.  As you already own them, I'd get the rehab work done before going to the lender. Then you need to simultaneously be prepared to know how much cash you would want to take out (via the new loan), as you need to be able to cover the payments in addition to your normal operating costs.  I go super conservatively and run "what-if" scenarios for vacancy.  If the $ has to come from your pocket or reserves, will that cause a hardship?  Thoroughly research your rental market to help here with income, which I'm assuming you may already have done.

Lenders can be credit unions, traditional banks, etc.  Just interview several to check out closing costs and rates. It's all in the numbers and your cash flow.  Be totally comfortable with your decision before pulling the trigger. Pretty great rates right now, so great thought to pull that $ out and take advantage of the potential bargains that may come from the pandemic.

Don't get so excited you over leverage.  One of my favorite sayings... Pigs get fed, Hogs get slaughtered!  Enjoy the ride!