4-Plex Refinance Question

[Kellen Driscoll]

Hey BP,

I wanted to get a second opinion before I pull the trigger on a 4-plex refinance. I used a FHA low down payment loan to purchase this property, I rehabbed it, and now I am looking to refinance out of the PMI and be able to use the FHA loan again.

Now I am going to have to pay roughly $10,000 for the refinance because the appraisal came in a little lower than expected and also closing costs for the new loan. I will gain roughly $30-40 a month in cashflow following the refinance, which is meager return at best.

The benefit that I am seeing is the opportunity to use the FHA loan again and a small amount of extra cashflow. My plan would be to use the FHA loan for a duplex/triplex to live in and airbnb/rent out the other unit(s).

Thoughts? Opinions?

Thank you!

Kellen Driscoll

[Angelica M Garzon]

Oh wow that's  GREAT! 

I would definitely look at the math on both options. 

1. Skip refinance: Total $ invested= ?? 

Current ROI= ??

NOI YR 1-3 (projected income)= ??

2. Refinance= Total $ invested after Refi completes

ROI= ??

NOI YR 1-3 = ??

2nd Property Total Cash Invest: 

ROI= ??

NOI YR 1-3 (projected income)=

Then figure out which one gives you a better outcome. If you're going to cashflow near the 1k you're already getting from the 4-plex the refi might not be worth it bc your return will be the same. 

Good Luck!