Cash out Refi and reinvestment help!

[Tim O'Keefe]

Hello all! I am a long time lurker here, living in the North fort worth Texas area,  and have been out of the game for a while and need some help before finally making my next move.

I have two properties, a primary residence purchased in 2011 in TX and a second townhome in RI in 2012. The townhome is rented by family and basically they cover enough to make the mortgage but in not making profit from it.

I have about 80-100k in equity in each property and am debating on whether to do a basic refinance considering how low the rates are right now OR Cashout refinance, Heloc, Heil, OR just leave it be and wait til my family decides to move (potentially 1-5 years)

I have more family here that would be able to do the same thing as my family in RI and basically pay the mortgage but I wouldn't be making profit, simply owning another property and building equity long term. I was thinking of doing a cash out refi on the second property, pulling out as much as I can (maybe 40-80k) and using that for the down payment on a new property here for them. What do you all think of this idea?

I have a few more ideas and lots of questions lol so any and all help is appreciated!

Thanks 

Tim

[Andrew Postell]

@Tim O'Keefe  thanks for posting! Always great to hear from a fellow Texan. Bigger Pockets does have some good state specific forums and Texas is their most active forum. Feel free to post there if you ever need some more "local" advice about things.

Let's cover the "cash out" question you had posed initially. While the amount of equity is nice to have...it's the % of equity that is the critical part. Here's what I mean:

In the state of Texas you will be limited to 80% of the property value with a cash out loan.  So if your home was worth $200,000, then 80% = $160,000.  And if you owed $150,000 on the home, then you would be limited to $10,000 in equity you could pull out of that primary home.  Alternatively, if that same home worth $200,000 had a mortgage of $170,000 on it....then you could not pull out ANY equity of the property. And all of these numbers are for single family homes. I hope that makes sense how I am describing it.

On the investment property you will actually be limited to 75% of the ARV using traditional Fannie/Freddie money. Again, the value in relation to the mortgage owed is the critical piece to know if you can even do a cash out loan or not.

Hopefully this will get you a bit further in knowing what direction to go in.  But feel free to ask anything additional if you need.  Thanks!