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Updated over 3 years ago, 06/09/2021

User Stats

66
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15
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Christian Weber
15
Votes |
66
Posts

Cash out refi on primary for DP on investment property

Christian Weber
Posted

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 

User Stats

4,079
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3,760
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Jaron Walling
Pro Member
  • Rental Property Investor
  • Indianapolis, IN
3,760
Votes |
4,079
Posts
Jaron Walling
Pro Member
  • Rental Property Investor
  • Indianapolis, IN
Replied

@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.

User Stats

66
Posts
15
Votes
Christian Weber
15
Votes |
66
Posts
Christian Weber
Replied
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)

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User Stats

4,079
Posts
3,760
Votes
Jaron Walling
Pro Member
  • Rental Property Investor
  • Indianapolis, IN
3,760
Votes |
4,079
Posts
Jaron Walling
Pro Member
  • Rental Property Investor
  • Indianapolis, IN
Replied

@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