New property: Buy cash, rent and refinance in a year or finance

[Amit P.]

Hey folks,

I'm purchasing 2 brand new duplexes (new construction).  Typically I finance the property by putting 25% down however, then my money is tied into the property for a long time or until I refinance.  Would it be better to purchase all cash, find the tenant, and then refinance and hope that a higher appraisal will allow me to get all my cash out?   I believe I'm receiving the new construction for about 10% below what it will appraise for so I only need it to go up 15% to get all my money back.  Will banks do this or should I stick with keeping my 25% in each duplex?  

Not sure if you need the numbers but people seem to always ask on this forum so:  Purchase Price Per Duplex- $250k, expecting rents to follow 1% rule ($1300 per side).  Expected appraisal around $270k.  So I'll need to put down $62.5k for each duplex if I finance.  Thanks in advance.

[Cameron Tope]

Amit,

"Would it be better to purchase all cash, find the tenant, and then refinance and hope that a higher appraisal will allow me to get all my cash out?" 

Hope is a poor strategy. Have you spoken to an agent or someone with MLS access that can give you a solid appraisal value?

270k doesn't sound like it's going to allow for a sensible refinance due to closing and transaction costs. 

Do you have a bank lined up who will do the refinance? I work with some banks that will refinance right away and others that won't refinance until one year of ownership. 

Best of luck!