My first Cash out Refit :P

[Brian S.]

Hey Fam,

Seeking an OG to give me their "hot take".. like a "holy shii don't do that" and or listen to my thinking and tell me if it sounds reasonable.

A second set of eyes.

So I own a 18 unit bldg, and have a partner at around 25% stake. I/we have owned for 4 yrs now, and as I've gradually increased rents and thus NOI, the property value has increased significantly (also compressed cap rates where i'm at), and my partner is seeking a buyout, which I'm game for.

Applying for a refi, and just now got the proposed terms: 1.2M Loan at 7% for 5yr term/30yr amortized.. sheesh..

My thoughts: I really want to get liquidity/equity out, which in this case I can get out a good 350k at least, as there's "blood in the streets" across many investing asset classes, and I believe I can get amazing entries/returns over the next 24 months, and definitely/easily "beat" the 7% cost of money here for this loan, BUT 7%, dang, that's highest loan I've ever signed for by far..

Anywho, not seeking an "answer" but more or less some thoughts, a "what would you do?"

I'm basically gonna do it as I'm confident to get at least a 2x, and maybe 3-5x, in crypto investment in next 24 months..

(I think waiting for rates to come down could long time)

[Justin Winn]

Two things stand out to me in this post. The first being your concern about the 7% rate. If you have run the numbers and what ever amount your new payment will be, if you’re still comfortable with the cash flow then the percentage is irrelevant. 

The second thing is that rates have already started to dip some, however, most economists I listen to think you have 6 months and then rates will start to climb again and that as inflation comes down the FED will work to get rates back down so you could potentially refinance in a couple of years and then your deal gets a little sweeter.

I might recommend a couple of podcasts. On the market, a BP podcast and planet money a NPR podcast.

Best of luck to you.