Cash out refi or Sell $1 million condo

Cash out refi or Sell $1 million condo

Member since 2020 · 10 posts · 1 vote

Hello fellow real estate mogul/gods, I am new to real estate investing is a complete newbie in this. I am in this scenario right now and would love to seek some advice on how to best strategieze and achieve the goal of building 200k in passive income in 5-10 years? Thanks a lot!!!!! Appreciate your time 

Background:

I have a 1 million dollar condo in a Class A metro city. The condo is completely paid off and is recently built (within 5 years).

Total income: 3.8k

Taxes and HOA: ~800 each combining to around $1650 a month

Net income: ~2.1k a month

I paid in cash ~865k back in 2017.

Personally, I earn a decent income (~180k) and is in late 20s. No debt or any payment.

My goal is to be able to build a 200k net cashflow in 5-10 years, obviously sooner the better.

I have a decent amount saved and is thinking if I should free up more cash by either selling the condo or refi and take around 400k out (interest rate is around 4.5% last I checked) for 30-year fixed.

Any advice or ideas on strategy to achieve the goal of building 200k in passive income? Should I sell or hold the condo?

Any insight is appreciated. Thanks so much!!

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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    4y

    Dennis,

    Do not sell! You have your own personal bank account built into the equity of that Condo! My advice would be to do a cash out refinance and take out enough for the down payment and renovations for (2-3) new rental properties. That cash is going to put you in an advanced position in getting a good deal. Cash is king and you can put in a strong aggressive offer under ask to close no contingencies. That will allow you to do two thigs immediately take out 75% cash with no title seasoning to get your capital back with a delayed financing loan. Secondly it will allow you to renovate the property with the side cash to then refinance in 6 moths or when renovations are done to take out a higher LTV of cash based on the new ARV.

    In case you did not know when you buy (All Cash) delayed financing allows you to immediately with no title seasoning take out 75% of the cash purchase putting fund back into your pocket. Instead of waiting the 6 months title seasoning to use the new appraisal. This way you can pay all cash on properties that would not pass an appraisal/inspection or REO short sale/foreclosures. This will open up your REI to a whole new level...

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