Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
8mo
@Michael Hites This is either a homerun deal or you're numbers are way off.
A $5,000 renovation does not equate to $80k worth of value-add. I'm sure it happens but it's rare and we haven't been fortunate enough to buy "no brainer" homerun deal. Maybe I'm misunderstanding the numbers.
What did you mean by "take the $26k"? A lender checking you a check for $26k at closing? Unlikely. This further validates my issue with the numbers, but we're not in your market and these are opinions.
Idk your experience level but I would not over leverage this property on the refinance. If that means leaving $26k in the deal do it. This market is unforgiving, you need equity, and need reserves to the keep the engine running.
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
8mo
@Michael Hites This is either a homerun deal or you're numbers are way off.
A $5,000 renovation does not equate to $80k worth of value-add. I'm sure it happens but it's rare and we haven't been fortunate enough to buy "no brainer" homerun deal. Maybe I'm misunderstanding the numbers.
What did you mean by "take the $26k"? A lender checking you a check for $26k at closing? Unlikely. This further validates my issue with the numbers, but we're not in your market and these are opinions.
Idk your experience level but I would not over leverage this property on the refinance. If that means leaving $26k in the deal do it. This market is unforgiving, you need equity, and need reserves to the keep the engine running.
@Michael Hites This is either a homerun deal or you're numbers are way off.
A $5,000 renovation does not equate to $80k worth of value-add. I'm sure it happens but it's rare and we haven't been fortunate enough to buy "no brainer" homerun deal. Maybe I'm misunderstanding the numbers.
What did you mean by "take the $26k"? A lender checking you a check for $26k at closing? Unlikely. This further validates my issue with the numbers, but we're not in your market and these are opinions.
Idk your experience level but I would not over leverage this property on the refinance. If that means leaving $26k in the deal do it. This market is unforgiving, you need equity, and need reserves to the keep the engine running.
Yes, it was a good deal. My numbers are very good. Ive been a very successful realtor for 28 years. yes, I can do a cashout refi, ever hear of those? Lenders will only lend 75% of appraised value, already it lined up. 75% of is $161K minus the $140 into it. I did all the work except carpet. The market is great where Im at. I have 7 properties and a LOC of $465K. IDK your experience level but sounds like you're new!
@Michael Hites This is either a homerun deal or you're numbers are way off.
A $5,000 renovation does not equate to $80k worth of value-add. I'm sure it happens but it's rare and we haven't been fortunate enough to buy "no brainer" homerun deal. Maybe I'm misunderstanding the numbers.
What did you mean by "take the $26k"? A lender checking you a check for $26k at closing? Unlikely. This further validates my issue with the numbers, but we're not in your market and these are opinions.
Idk your experience level but I would not over leverage this property on the refinance. If that means leaving $26k in the deal do it. This market is unforgiving, you need equity, and need reserves to the keep the engine running.
Says he bought at auction, could have instant equity. Why do you think a cash out isn't possible? Just curious.
Bought a property at auction with a 7% HELOC for $135K. I will have less than $5K into it.
It should appraise for $210K easy but will shoot for $215K .
Could rent it for $1600.
PITI should be around $1140 if I take out zero $$ and just pay back the HELOC.
My HELOC is $465K.
OR
Do I refi, take out all the equity I can $26K (got have 25% into it, correct) and payment is around $1350?
My thinking is take the $26K as it would take me 10 years to accumulate $26K at $200 extra a month!
@Michael Hites Just to clarify, does this property require any rehab before you rent it for $1,600?
I did the rehab, almost done, cost less than $5K
@Michael Hites I assume you're doing the refi with an HML, is that correct? If so, is your "PI" around $1,000 (not sure of your "TI")? If your numbers are correct, this looks like a great deal!
Bought a property at auction with a 7% HELOC for $135K. I will have less than $5K into it.
It should appraise for $210K easy but will shoot for $215K .
Could rent it for $1600.
PITI should be around $1140 if I take out zero $$ and just pay back the HELOC.
My HELOC is $465K.
OR
Do I refi, take out all the equity I can $26K (got have 25% into it, correct) and payment is around $1350?
My thinking is take the $26K as it would take me 10 years to accumulate $26K at $200 extra a month!
@Michael Hites Just to clarify, does this property require any rehab before you rent it for $1,600?
I did the rehab, almost done, cost less than $5K
@Michael Hites I assume you're doing the refi with an HML, is that correct? If so, is your "PI" around $1,000 (not sure of your "TI")? If your numbers are correct, this looks like a great deal!
Not gonna refi with an HML, just a normal lender. Why would I use an HML? Thank you
Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
8mo
@Michael Hites In reality, and for better or worse, loans provided by HMLs for 1-4 family investment properties are becoming more "normal" these days.
Are you going to apply for the loan through an LLC or via your personal name? If your lender is going to apply a "Debt Service Coverage Ratio", I suspect the max loan will shake out under $130k. An HML would be able to do something closer to $160k. Just my 2 cents.
Lender · Marlboro, NJ · Member since 2025 · 239 posts · 146 votes
8mo
The way I’d frame this is less about which option makes more money on paper and more about what problem you’re trying to solve.
Taking the cash out gives you liquidity and optionality, but it also compresses your margin of safety. Your cash flow cushion gets thinner, and small issues like vacancy, repairs, or rent softness matter more.
Leaving equity in the deal keeps the property more resilient and gives you flexibility if anything goes sideways, especially since HELOCs are variable and can change faster than people expect.
One middle-ground approach some investors take is not maxing the refi on the first pass. Pull enough capital to stay liquid without pushing the payment to the point where the deal only works if everything goes right.
Cash out can accelerate growth, but only if the base deal stays boring and durable.
Michael, this is a classic liquidity vs. cash flow decision. If the property still supports the debt, many investors choose to pull moderate cash out rather than leave equity idle.
The key is not max leverage, but whether the deal still stands on its own after the refinance. If the rent comfortably supports the payment, accessing equity now can accelerate portfolio growth far faster than waiting years to save the same cash flow. I sent you a DM, let's connect!