All Forum Posts by: Lauren C.

To add- I found multiple banks who will either do a 4 or 6 month seasoning for the refi which is not an issue for me as I've already owned it for 3 months.

Thanks!

Hi All!

I know this topic has come up before but I read most of the past forums and those asking the question are either asking about a property they paid cash for or used hard money to acquire it. I'm in a slightly different boat.

I recently purchased my first duplex. It will be owner occupied for 1 year until I buy and relocate into another small multi. We've put a lot of money and work into rehabbing the units and I would like to free up some cash for the next deal as well as pay off a credit card we used to assist with rehab. (New card with 0% APR for another 10 months)

Here are the numbers:

Purchase Price- $117,000

Down Payment- 20%

Current Mortgage Rate- 4.875

Rehab Costs- $50,000

- We did A LOT of the work ourselves and while we haven't had it appraised yet, our realtor is confident it will appraise for at least $190,000.

I called a bunch of banks and the best rate I can find for a cash out refi is 4.2.  Lower than my current rate! In order to make the deal "work" in terms of cash flow, I would only plan on cashing out about 30k. 

So here's my dilemma that I'm sure others have.

Do I do the cash out refi, pay a few thousand in closing costs, get a lower rate, but increase the mortgage payment thus decreasing cash flow a bit. (I'd be right at $100 a door after the refi. This accounts for all expenses, repairs, vacancy, capex. I'm very conservative in my numbers for reserves.) Also, are the closing costs worth only pulling out 30k?

or

Do a HELOC which people seem to love as they can borrow and pay it back at often as they like?

Pros- No closing costs. Lower interest rate on the cash only when I use it. 

Cons- According to the banks, the HELOC rate is only locked in for 5 years and then can increase up to over 5-6% and I heard stories of HELOCs being called back with not much notice.

Overall, my goal is to pull 30-35k to pay off a credit card and use as a down payment for the next small multi.

What do you guys think?

Side question- Can I do a cash out refi AND a HELOC afterwards on the same property? Can I do both?

Thanks in advance for reading this whole thing and any advice!

Hi @Ty Martin !

I personally dislike using Zillow for small multis. The filter isn't the best. I prefer to use realtor or Trulia as they have a "Property Type" filter where you can check off "Multi-Family" 

I'm in the South Jersey area and started with House Hacking. Feel free to shoot me over any questions! I also have a blog where I've been detailing the searching, buying, and rehabbing of the property which I can DM you the link to if you'd like.

Best of luck!

@Jonah Richard

Hi Jonah, I believe he mentions earlier in the thread that he used Trust Co bank in Ramsey. I called them to inquire about re-financing my duplex and was told they only loan on properties in the Bergen County area of NJ. 

@Manolo D.

Thanks for the insight. 

I wasn't recommending that he pay the roofing company by credit card, but if he were to purchase the materials himself, to use a card to buy that. For example, if he bought the materials from Home Depot, using a CC there, and paying the company doing the labor by check/in cash. 

@Eric Frohman

Hey Eric, 

Right across the river in Collingswood over here! Let's connect!

Hi @Orkeem Davis

If you do end up buying the materials, I would open up a new cash back or mileage credit card with 0% APR for the first year. This way, you can be rewarded for the material cost (perhaps 2 free roundtrip flights if you swing it right) and have a year to pay it all off.

@Sunny Burns Interesting! Good to know. I am looking to refi our duplex but wasn't sure if that extended the period of time we had to live there before house hacking another small multi. Thanks!

@Sunny Burns

Hi Sunny! You already know I'm a big fan of your successes and great documentation of it, but I do have one question. You're cashout refi on the 4-plex. Was the low rate contingent on being owner occupied and if so, how long did/do you have to live there before moving to the triplex?

Thanks!

** and i just saw your bit about rent control. Please ignore my post below. Whoops!

Hi @Sol G.

I don't have experience with this but do have a thought.

Since the term is month to month, can you give notice that rent will increase next month? (Assuming that the increase is not unconscionable.) Hoping your tenant will not want to pay the increased rent and voluntarily leave? And if they don't, at least you're making more money.

According to the NJ Department of Community Affairs, on a month to month lease, the landlord must give a 30-day Notice to Quit given on the first day the rent is due.  

Below is the link I'm referring to for more info. Hope this helps!

http://www.state.nj.us/dca/divisions/codes/publica...