What would you do with $150-175K cash from refi?

[Stephanie Wells]

So I’m finally taking the equity out of a duplex I purchased back in 2015. I will have about 150-170K cash after doing a cash out refi. I was going to play it safe and stay local in my Tampa Bay market, which means the cash would be a down payment for a multi family property in my area since everything is so expensive (also rents aren’t amazing, 1% rule doesn’t apply in Tampa’s market).

I am now tempted to try an out of state market where I can use that cash to buy a multi-family property outright and then cash out refi to buy another multi-family. If I go this route and can only fly out once, when is the best time to go - to initially view properties, or to see the final property with the inspector?

Appreciate your thoughts!

Stephanie

[Jeff Shumway]

Hey Stephanie,

I'm not sure if you plan to force any appreciation on the property but keep in mind that if you purchase a home cash and do a cash out refinance you may be limited by the purchase price of the property on the cash out refinance. This is called delayed financing. For a conventional loan, the max loan amount is 80% of the purchase price. So if you do any repairs on the property, you likely will not get a loan amount that reflects the full ARV. You would have to wait 6 months to to get a loan based on the full ARV. There are programs that will lend around 70-75% of the purchase price + any documented repairs but it can be a bit of a gamble if the purchase price + documented repairs will come back at the ARV.