How do I refinance my 1st Rental Property?

[Daniel Herrera]

Hi guys, I’m planning on buying a duplex for $50k in cash. The duplex is already rented out. Rental income is $1k per month. Property is in good condition.

After I buy the property I would like to refinance and pull out 80% of the equity ($40k) to use for another rental property.

I’m wondering what type of lender or bank should I target for this type of refinance and what interest rate should I expect?

Thank you in advance for your help and feedback. If there's any other pitfalls I should look out for please let me know!

[Mike McCarthy]

@Daniel Herrera if possible, I’d just use financing to buy the property. You’ll save 0.5% or so on the purchase vs a refinance. Since you’re not doing much/any rehab, there’s no reason to do a cash out refi, and unless you’re getting a good deal because of the quick close, it’s cheaper to get financing during purchase.

Most any bank should be able to loan against an investment property. Some do 80% LTV, others only do 75%.

The two big issues I think you’ll run into is 50K is low and not all banks lend such small loan values. The second is with Covid, a lot of banks have significantly tightened up their lending.

I’d call around and ask!