Rehab then refinance or Refinance to Rehab
I currently own a duplex in West Allis. I bought it right before the market surged a couple years ago. According to my home report I have just under $100,000 in equity. I have been doing updates over the past year. Basic refreshes to the fixtures, appliances, etc. I want to do some larger updates like replacing the HVAC system. I would have to do finance for this project. I want to refinance before the end of the year, pay off the financed improvements to the property, and use the excess money to invest in my second property. Is this a logical thought process or am I digging myself into a hole?
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Not a bad idea. I would verify and have an agent run comps that you'd hit the ARV you need. I would also verify the numbers will make sense once you do refi, I assume your current interest rate is cheaper. The only bad part of doing a refi is losing your current rate and it bumping up. Not sure where it is but if it's cheap then that'd be something to consider. Some people look at doing a HELOC but that is much harder on a investment property compared to a primary. Another thought is doing a 1031 into something bigger.