Rehab or refinance multi family

4 Replies

Hello everybody. New to real estate investing and the forum here and really happy I joined. After some personal issues I’m financially ready to start investing.

I Want to get your expert advise:

I currently own a multi family property In Ventura county. The property is comprised of 3 units, a main house , a guest house and a studio. The property is paid off and I got it appraised almost 2 years ago (by a registered appraiser) and it appraised approx $675,000. I also completely renovated the studio 3 years ago. Although I have kept up with repairs, the main house and guest house could use some renovations (kitchen, bathroom, new floor). I currently rent all 3 units. The property is paid off and have plenty of equity in this property to start investing in a Brrrr strategy.

My question is:

Should I refinance, rehab, rent, repeat my property? Or just refinance and go buy an investment property?

May seem like a straightforward answer but just want to get expert advise. Thanks for your time.

@Alan Carranza It depends. What are your goals? Cashflow? Appreciation? Balance of both? Do you want to use debt or do you want things all paid off?  So many questions!

To determine if you should keep it, you need to know what would your property rent for in total if rehabbed? What would it appraise for in total when rehabbed? Then run a BRRRR analysis to see if you should just BRRRR your own property. Just keep in mind that CA tends to have high taxes, and favors the tenant more than the landlord (especially during COVID). There are other drawbacks as well.

Or you could sell as it now (or rehab it and sell at the higher ARV) and 1031 those monies elsewhere and most likely create higher cashflow. You will need to find out the value "as is", the construction budget, and the new "after repair value" to help you make this decision.

If you do decide to sell, then you will need to source a new market. I'd suggest out of CA so you can pick up more properties that cashflow much better, and have more debt for the tenant to pay down if you choose to use debt. 

PM me if you have Q's!

@Alan Carranza Just compare what closing costs, debt service and interest rate would be if you did a cash out refinance. If you can do a Cash out refinance and pay 4% interest rate, cash flow and use that cash to make more than 4% then its a no brainer. If that doesn't seem possible just do a HELOC and tap into the funds when you want.