All Forum Posts by: Erick Castro

I understand you are getting other services in return for the rent concessions you are offering your brother in law but a lender does not care. They are going to see the rent at $850 and your debt coverage ratio will impact the loan options available. From strictly a loan origination standpoint you are better off charging your brother the fair market rent and then work out other arrangements to compensate him for the maintenance work.

Hey Stuart, thanks for the reply. The bank that gave the option that I mentioned said it wasn’t a problem at my current rent. I’m sure it may limit my options with other banks though.

0 Votes

Fort Smith, Arkansas

Hello all. I’m relatively new to real estate investing.. I’m in the process of refinancing a house to get some cash out. I’m confused about who I should refinance with. Should I do it through a commercial bank where they do a 3 year loan with variable interest (this is who I currently have the loanwith)? Should I find a local bank and do a 30 year fixed rate? Or should I be looking for another option? Below is what my numbers are looking like and I spoke to one local mortgage company and provided below some numbers that they gave me. Appreciate the help.

Owed: $52,000
ARV: $130,000
Monthly Rent: $850 (could get more but I’m renting to brother in law. He handles maintenance and takes good care of the property)
Current Interest rate: 4.5% but will be changing to Prime plus .5 in 2 months. I’m almost at 3 years of ownership.

Local Mortgage Company Offer:
75% of ARV (but I want to do less so that it cash flows better)

$30,000 cash out is what I’m looking at (have some other real estate investments that I’m working on)
$5000 estimated closing costs
$2500 (paying points to get interest at 7.5% is what they told me… kind of confused on how this works)
30 year loan with fixed rate of 7.5% is what I’ll end up with.

At these numbers my loan would be around $89,000. My loan payment including taxes and insurance would be about $760. Cash flow would be around $100. Not the greatest but I’ll make it work.

My future plan is to refinance when (or should I say IF) interest rates go down to 5.5 - 6% (or lower) so that it cash flows better. I just need the cash out now so that I can jump into a project that I’m looking into.

0 Votes

Fort Smith, Arkansas

Hope I can still get an answer on this old thread. I’m in the process of refinancing to get some cash out. I’m confused about who I should refinance with. Should I do it through a commercial bank where they do a 3 year loan with variable interest? Should I find a local bank and do a 30 year fixed rate? Or should I be looking for another option? Below is what my numbers are looking like and I spoke to one local mortgage company and some numbers that they gave me. Appreciate the help.

Owed: $52,000
ARV: $130,000
Monthly Rent: $850
Current Interest rate: 4.5% but will be changing to Prime plus .5 in 2 months. I’m almost at 3 years of ownership.

Local Mortgage Company Offer:
75% of ARV (but I want to do less so that it cash flows better)

$30,000 cash out is what I’m looking at (have some other real estate investments that I’m working on)
$5000 estimated closing costs
$2500 (paying points to get interest at 7.5%)
30 year loan with fixed rate of 7.5%

At these numbers my loan would be around $89,000. My loan payment including taxes and insurance would be about $760. Cash flow would be around $100. Not the greatest but I’ll make it work.

My future plan is refinance when (or should I say IF) interest rates go down to 5.5-6% (or lower) so that it cash flows better. I just need the cash out so that I can jump into a big project that I’m looking into.

0 Votes

All Forum Posts by: Erick Castro

Erick Castro has started 1 posts and replied 3 times.

Post: Cash out options? Who should I refinance with? HELP

Post: Cash out options? Who should I refinance with? HELP

Post: BRRRR Strategy Explained & Cash-Out Refinancing