To take my equity or not... that is the question?

[Ivan Correa]

Hello guys i have a question one of my properties is a two family with a studio added on the basement as well, i don't know what it is currently valued at but I'm sure it's valued for more then what i purchased it for since I did a full Reno. I was speaking with some colleagues and one of them was telling me he could get me approved up to 75% loaned out based on the appraisal. He says it will be a commercial loan at around 6-7% he says it's a good idea to use the cash and leverage my self out through hard money loans to grow my flipping business. Current rate is 4.75 on a standard 30 year note, home was purchased for 140k did a Reno of 94k. By their calculations they say that it can be valued at around 250k I only owe about 108k on it. My question is what are the pros and cons of this move and is it truly something wise to do? Any input would be greatly Appreciated.

[Jeff Keller]

75% of 250k is 187.5k. They would be loaning you an additional 82k but you would be paying a higher interest rate on 187.5k.

 $5,230 interest increases to $13,125. Thats about $8k per year to borrow another 82k

Be certain you can invest the money and get a greater return.