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Updated over 3 years ago, 06/09/2021
Cash out refi on primary for DP on investment property
Firstly hello - long time reader and first time poster
Some advice needed
I have 155k (24 yrs) left on Primary mortgage at 4.1% (home worth 320-350k)
If I cash out refi I potentially can take up to 100k out / drop interest rate to high 2's/vry low 3's and have a payment $200 up on my current monthly
I will make around 160-200k USD this year from my jobs (more if I buy a rental) and my mortgage is within $100 a month paid off by roommates (I cover the utilities which are $300USD a month)
Question is with money being really cheap would it make sense to cash out 100k to have it and either stick it in the s&P500 or use it for DP on 2 or 3 investment properties?
I was considering doing a heloc and using it to flip some houses but my business partner went potty and cant rely on him anymore. I currently have about 60k in an emergency fund as well
All input appreciated
I also dont mind holding until this eviction thing passes and some homes might hit the market in sept/octo however it takes a month to cash out refi
@Christian Weber If you don't have other consumer debt or car payments I'd seriously consider the cash-out ReFi. Getting a lower interest rate is the smart move as long as you plan to stick around for a few years. Paying closing costs just to turn around and move out is pointless. It's smart to pad the emergency fund (everyone preaches 3-6 months) and having cash for the next investment if a good DEAL finds your way. With your income you should be able to do all of the above anyways so congrats on the success so far.
Originally posted by @Jaron Walling:
@Christian Weber If you don't have other consumer debt or car payments I'd seriously consider the cash-out ReFi. Getting a lower interest rate is the smart move as long as you plan to stick around for a few years. Paying closing costs just to turn around and move out is pointless. It's smart to pad the emergency fund (everyone preaches 3-6 months) and having cash for the next investment if a good DEAL finds your way. With your income you should be able to do all of the above anyways so congrats on the success so far.
I appreciate your reply - only debt I have is a $350 a month car payment, I will most likely keep the home for another year or two then turn it into a rental for 3 years and then sell before the capital gains monkey catches me (2 out of 5 years I think) So it would make sense I think
My emergency fund is solid as my rent is covered mostly by roommates and having 60k just sitting in a .5% interest account is secure enough to last me 3-6 months (truth be told 20-30k is more than enough, I live really low)
@Christian Weber $350 per month was the same payment I had on my car. I bought a BMW 6 years ago. Best car I've every owned. Worst investment I've ever made. Haha