Advice needed, when to Refi a duplex...again?

Question

Greetings all. I'm new to BP and new to doing REI the RIGHT way. I bought my first duplex circa 2008 and lost my butt overnight. I had high interest, low rents, and a poor housing market to resell. Too stubborn to give up I've been sitting on the property and paying out of pocket ever since. I moved into the property a year of so ago and refinanced midway through house hacking one side in an attempt to lower my mortgage and open up some cash flow. The property finally started to break even. I've since increased rent, screened for better tenants and I'm currently hacking the other side. At my current interest rate and rent when all said and done I'll be roughly 11% cash on cash ROI (based on full occupancy after rehab). Should I refinance again once the rehab is done? If so, is it better to refinance as owner occupied or should I move first and rent out both units at my new higher rent?

Jeff Dulla · Answer

@Michael Slot These questions are always a bit more complex then I think people originally intend them to be. I have questions before offering up any suggestions:

- What is your current rate?

- What is your near term plan for the property? To leave there or be out within six to twelve months?

- How much money are you trying to cash out?

- Do you have other opportunities lined up or in mind that have higher returns?

Ultimately the answer to your question is maybe. It just depends on what the plan is from here and what the current financials look like.

Jeff Dulla · Answer

@Michael Slot Based on that, I would say you have to call this an investment then. Which will limit the amount of money you can take out (really, restrict the loan to value you can go up to). What is your current loan amount and the current value of the property based on comparative analysis of closed comps?

The rates is pretty similar to market for owner occupied - so you will also lose on that a bit.

Michael Slot · Answer

@Jeff Dulla my current rate is 4.25. I'm looking to finish the rehab in the next couple months and move. I would continue to manage as a rental but I'd like to pull enough out to have a down payment on a single family flip or another duplex buy and hold. I currently don't have anything lined up. Just excited about some possibilities and looking to start making moves.