Re-fiance or Sell current property
I am a military member being re-assigned from California to Virginia. My current home was built in 2006, I have lived here for 3 years now and have not had to replace a thing maintenance wise. My house here in CA is currently appreciating at a rate of $2-4K each month give or take, so if possible I would like to keep this asset for long term appreciation as this would be my first rental as a buy and hold investor. I have come up with 4 options moving forward, any and all inputs are appreciated. Essentially, what I would be doing is a BRRR (minus the R for rehab) because the rapid appreciation has given me built in equity. Quick break out of the numbers are below.
Current Interest rate: 3.25% with Wells Fargo fixed (27 years left)
My loan balance: $336K
Home Value: $437K
Current monthly payment: $2K (would rent for $2,200)
Option 1: Sale the house outright, after paying taxes and closing cost I could profit about $70K.
Option 2: Rent out as is without refi and probably break even if not come out the pocket here and there to cover maintenance issues as they arise.
Option 3: Refinance with a military Credit Union at 3.0% fixed for 30 years interest rate (already approved). Leave 100% of the equity ($101K) in the house and refinance, this will bring my new balance to $356K after absorbing the VA funding fee and paying taxes and closing cost again. This drops my monthly mortgage to $1502. So after insurance and property management fees (roughly $200), I could cash flow roughly $500 a month if all goes well with no maintenance issues.
Option 4: Same first step as option 3, but instead of leaving in 100% of the equity. I can pull out $30K (roughly 30% of the equity) for a down payment on my next property purchase in Virginia leaving 70% equity in my home and refinancing at a new mortgage balance of $387,960. Additionally, it reduces my monthly mortgage down to $1636. After insurance and property management fees, I would have roughly $350 each month left in cash flow.
Most Popular Reply
Option 5: 100% cash out refi since that rate is stupid low. 3.0% 30yr fixed? If that's with no points, it's a no brainer. Take it all out. Use whatever you need to buy your next property in VA, and use the rest for a down payment for another investment property. Or lots of other uses. Even if you won't cash flow on your existing property as well, using tax-deductible OPM that cheap is a no brainer. Assuming you know how to put it to good use. You need to strategize with someone who is looking out for your best interests.
TYFYS and best of luck!