Cash out refi on investment property.

[Adam Craig]

Right now I own 12 single family homes in the Cleveland market all financed between 4-5% with most of them on a 30 year term and 2 of them on 20.... All of them cash flow between $200-$450/ month.

With my current business income I am able to purchase about 3 properties a year. Because I am young (27) and have time on my side - I feel pulling some equity out to accelerate my business might be a good way to go.

I know everyone has different levels of risk tolerance butI want to get some BP member thoughts about doing a cash out refi on investment properties before I make a decision.

Pros/Cons?

[Richard Ball]

Assuming you have a relationship with a local bank you could pool all that together in a HELOC. With your new 265K HELOC you can buy a property cash, fix it up and after a year since you have forced appreciation refinance it and pay off the entire HELOC. Then rinse and repeat or since I am pretty sure your market is much like MI have multiple purchasing going at once and rinse and repeat. This essentially gives you an infinite rate of return since you should be able to buy with no money into the deal now. Make sure you evaluate the ARV properly and don't overspend on the rehab cost.