Best Loan Scenario For 2 Multi-Family Apartment Properties

[Quy Huynh]

I have a 9 unit property in Florida where the bank is willing to lend me $318k on (75% LTV; bought for 210k in Oct 2015, value is now 425k). 200k is being used to pay off a private loan and 118k is the leftover credit line amount I have to use to buy another property.

The next property I'm trying to buy is an 8 unit property which the price is $265k. The bank wants me to use all $118k to put into the 8 unit which is about 45% down with no appraisal necessary. I initially only wanted to do 25% down. They're telling me if I only do 25% down ($66,000), I will have to do an appraisal ($1500 so it isn't a big deal) and the leftover of the credit line (52k) will just stay as equity in the 9 unit property. If I choose to get the 52k out later, I'll have to do another appraisal on it with closing costs. In addition, in about 4 months I will want to pull equity out of the 8 unit as well because I am going to increase it's value and will want to use another credit line to buy again.

The bank is telling me the first option of putting all $118k from the 9 unit's credit line into the 8 unit is good because all the cash will be there which only will require 1 appraisal when I'm ready and also once the value goes up, I can pull more from it.

It's a little complex to me and I'm really just wanting to make sure I'm making the best decision to a newly established portfolio due to a sketchy divorce not long ago :) The loan scenario makes sense on the surface, but wanted to run it by the BP Squad before making the final decision.

Thank you