Cash-Out or No-Cash Out Refinance?

[Manco Snead]

Greetings,

I'd love to hear anyone's opinion on my refinance dilemma; cash-out or no cash-out.

I'm in the process of refinancing my duplex (Appraised at $290,000) which has about $100k (mostly from large down payment) in equity. Currently, AFTER mortgage,interest,insurance,taxes as well as prop.management fees, vacancy factor saving(150/month), maintenance/cap ex. saving($100/month), and utilities are all subtracted from rents, the property cash flows $250/month.

If I refi and take out $50,000 for an additional property, the refinance for the duplex using all above expense numbers plus the now higher mortgage will result in only $20/month cash flow.

So, is it worth it and a good idea to take out this money? What about eliminating a perceived expense such as maintenance or vacancy, or taking out a smaller amount?

Thanks

[Christopher Brainard]

@Manco Snead

If you can use that $50,000 and earn more than what you would having it otherwise locked up in the property, this could be a smart thing to do. If you can't take that equity and make it work for you, there is no reason to pull the cash out. Its really a decision that only you can make. I, personally, would put that $50,000 to work.

Eliminating the "perceived" expenses makes no sense - You can't just say "I'm never going to repair anything or replace anything in this property" and it magically happens. The reason people set aside money for CapEx, maintenance, and vacancies is because they will eventually happen. Some things, like HVAC or a New Roof, are quite expensive and can seriously impact you financially, if you don't have money set aside.

-Christopher