Hard Money Lending or cash-out refinance on investment property

[George Hernandez]

Hi folks,

Real quick, I have an investment property that currently sits on 2.99% on a 30-year fixed and I have about $155,000 in equity that I would love to start investing in; mainly BRRRR's. My question to the community is it worth doing a cash-out refinance for $100k and losing that interest rate or possibly getting a HELOC on the rental property if I can find a lender to do it? Or is it just better to find a hard money lender for a short term of about 1 year depending on the season period a traditional bank wants? I also need to start finding someone to work with and possibly be partners with. Thanks guys and gals!

[Timothy Hero]

Quote from @George Hernandez:

Quote from @Timothy Hero:

Folks get caught up on losing their interest rate. Oftentimes, it's a bragging right (ego feeding) to say you have such a low rate. I don't know the numbers on your property, so I'll create a hypothetical:

Assume your principal and interest on a $300k loan is $1,263.

You're sitting on the potential to get $155k (tax free, btw), but the rate will be 7.5%, taking you're principal and interest to $2,100.

Yes, it's $900/month more, but you have $155k of tax free money in the bank. Even if you did a horrible, barely cash flowing property with the $155k, it'll still net the difference + some.

Don't get caught up on the "I don't want to lose my rate". Because eventually the market will turn around and you'll lose the equity, which is worth way more than the rate and again, is tax free.

 Thanks Timothy,

I think you are right in the sense that it is a egotistical role in the sense on why I don't want to refinance. I do want to go ahead and refinance and pull that $100k plus to buy another piece of real estate and continue cash flowing for now. I do want to do it at the start of next year hopefully. Any advice? 

 I don't like to act as if I have a crystal ball, so I don't know if waiting a year will be best or not. I do know everyone was expecting rates to decrease in 2024 and here we are, 8 weeks in and they've gone up 35 bps.