Is a Cash Out Refi Smart In This Climate?

[Travis Bagley]

Hey fellow BPers,

I have 2 properties inside an LLC and have found the refinance part of the BRRR strategy to be the toughest yet. I've taken every precaution to setup my business right and limit my personal liability, but in doing so it seems like I've turned off 95% of the lending world. My best offer right now is 5.125%, 30 year, 75% LTV with a 2% origination fee as well as a $299 app fee, 595 due diligence fee, and add on the cost of appraisal.

Rate my refi if you will. Is this worth doing? I'm estimating I'm going to eat $7,000-8,000 in fees and my cash flow will drop to about $300 per property accounting for maintenance contingency. 

SFR

Value	$165,000.00
LTV	75.00%
Loan Amount	$123,750.00
Rent	1650
Taxes	1882
Insurance	750
Dues	0
Rate	5.125%
Balance	123750
Loan Payment	$673.80
Total PITIA	$893.14
Residual Income	$756.86
DSCR	1.847

• 30-year fixed, 5 year prepayment penalty (1% of prepaid balance)
• 75% LTV at 5.125%

DUPLEX

Value	$175,000.00
LTV	75.00%
Loan Amount	$131,250.00
Rent	1725
Taxes	2232
Insurance	744
Dues	0
Rate	5.125%
Balance	131250
Loan Payment	$714.64
Total PITIA	$962.64
Residual Income	$762.36
DSCR	1.792

• 30-year fixed, 5 year prepayment penalty (1% of prepaid balance)
• 75% LTV at 5.125% (the same for both scenarios)