Cash out Refi VA Loan

[Lucas Rowell]

Hello & Good day BP community, hope everyone is having a great start to the day.

We have two homes that my wife and I own that we purchased utilizing my VA loan benefit, that are now cash flowing properties. One was purchased 10 years ago the other more recently.

I wanted to do some comparing and contrasting on strategy on one of these properties to see what folks think.

- The house we have owned for 10 years has a good equity position from having a tenant paying down the loan. I was contemplating a Cash out Refi to A. lower interest rate 10 years ago was 4.75% (not planning to sell great cash flow) B. Use the cash out funds to purchase a 2nd home in the same area low interest rate to Cash flow . C. We would get back a portion of VA entitlement to then be able to use on our next primary residence purchase. (2020 Loan limits are supposed to go away for VA loans)

My hesitations are the following

- Seeing that residence is no longer a primary residence the Refi would not be able to be a VA loan (to my knowledge) so we will need to pay closing costs a down payment +PMI monthly on a home we already own. I am correct in this yes? Seeing we were looking to use a majority of the funds to do a down payment and closing costs on a second house, a cash out might be a wash given the above factors? Outside of the interest savings realized, and freeing up Va entitlement (1st home already own dp+cc +2nd home dp (25% investor financing conventional)+cc

- Does it make more sense since I have liquid cash to utilize that to get a conventional loan to buy another property and let the equity sit in the subject property until really need it and just keep paying down the mortgage and doing extra payments annually towards principal?

Thank you in advance :)

We are looking to aggressively grow our portfolio of rental properties to include additional single & multi family in the next few years and just working on our strategy.

Thank you for any insight : )

Cheers,

Lucas