Refinancing Investment Property

[Mal K.]

Hello everyone! I been listening to podcasts and reading BP posts for over a year, but I have not participated in any discussions. I have a question regarding an investment property I'm considering to purchase. It is a double 2-1 ( front and back apartments) the back is occupied by a life tenant (70 years old) that currently pays $271 that covers rent, heat, water and electric. John doesn't pay any additional expenses ( the house used to belong to his mother and now non-profit organization owns it). Based on John's low income the property was totally renovated with a rehab grant HUD program. Currently, there is a deed restriction for next 13 years on the amount of rent collected based on HUD guidelines. His rent and monthly living expenses have to stay 35% of his total income (he is receiving social security), therefore his rent cannot increase. There is a month to month tenant and she currently pays $510 (below market rate, rents in this neighborhood are $650 - $750 this is within HUD guidelines). Tenant in the front apartment pays for her utilities (except water). Ok this is the situation! What I would like to do is purchase the property for 24k ( was appraised for 60k), increase the rent to fair market rate, refinance and use cash to put a downpayment on another investment property. What are my limitations with refinancing this house with lien restrictions and life tenant? Are banks willing to refinance these type of properties? Taxes are 3,900 and flood insurance 1,600. Thank you for reading and your advise! Mal