New REI financing questions.

[Mason Fausnaught]

Hello BP!

I'm not entirely new to real estate or business in general. I own a few restaurants with a partner as well as currently hold one property as a rental (My wife's first home) in central PA. About a year ago we purchased a foreclosure as our primary residence, however this wasn't a normal foreclosure and far from normal circumstances. It is a 2016 home build and we paid over 40% less than the original asking price. This property did need a little bit of work but was overall in really great shape. The home foreclosure was due to failure to pay, certainly not neglect or structural issues. I purchased the property directly from the bank but at the time was not able to front the 20% down payment as I had just closed on two restaurants just a few months prior.

The time has come to refinance (to eliminate PMI) and I believe we have a decent amount of equity in the property. I was wondering just how bad of an idea it would be to use a cash out refinance to expand our rental portfolio. On top of my restaurants, we both work full time jobs and share a mid range 6 figure income. Knowing we have to refinance to get rid of the PMI. I want to take advantage of some of the other equity I have in the home. We are both in our mid 20's and are looking for the best way possible to move forward. I haven't ruled out a LOC as an option either but I would have to refinance either way first, and now is a great time with the low interest rates.

I guess my question is, is using current equity in my primary residence a bad idea? I do have some cash available but was thinking my equity could be used as down payments on multiple properties, allowing me to scale quicker. Once rented the cash flow would more than make up for the difference in my personal mortgage and if for whatever reason it didn't, our current income could handle it comfortably. I'm aware of other options to secure a down payment such as seller financing etc, but not looking to go that route just yet. I also know with time I could save up the cash for down payments, I just don't see a reason to wait with interest rates where they are. I was looking for some other opinions. Please feel free to reflect honestly as I'm excited to hear your thoughts. Thanks.

- Mason