Situation

[Thomas P.]

I purchased an old two family in a great neighborhood with large property for its location (NYC). My plan was to rent it out for 3 years and begin to rehab it and make it a single family home. I currently rent both units.

The money I used to purchase this was a hard money loan from a friend at applicable federal rate .28%. The home was purchased at a deep discount since it was a deal within the family. My original idea was to borrow the money from my friend and when I refi to pay him back take out less money and make up the difference with all the money I been saving plus income on the property.

For example if I owe him 250,000 refi 175,000 and make up the addition 75,000 from my personal savings.

The refi part should not be an issues since I purchase the home at about a 50% discount.

My main question is am I better off refi the whole 250,000 and keep my money for the costly rehab project (prob need additional funds via another refi) or refi 175,000 and pay him the difference out of pocket.

Any input would be greatly appreciated.