Brrrr strategy cash out refinance question

[Joshua Ibarra]

Hi BP! I've just finished my first non-live in flip and am not sure what is the best route to go. I've talked to several banks in the area for completing a cash-out refinance. My goal is to eventually have over 20 rentals but so far I have 3. I'm curious what your opinion is for the best strategy or if it matters when refinancing! The house I bought was in Kansas City and purchased for $20k. I've put $30k into and should have it appraised at minimum $80k. All of this has been cash out of my pocket so I would like to take the cash and start my next deal. One lender is saying to put it on a commercial loan with amortization of 20 years with ballon at 5 or 10 years. It would be a business loan though. Another lender says to put it as an investment-residential loan for a full 30 year loan term. Both interest rates are around 5% but wouldn't I want to do the 30 year loan or am I missing something? Thank you for any help!

[Dan Krupa]

@Joshua Ibarra it all comes down to cash flow.  If the 300 year gives you an extra 50 to 100 dollars a month but the commercial saves you $125 a month from reduced term length - go with that. Personally, I would take the 30. Some people want their properties paid off faster. I will take the tax deduction, passive income, and decide during year 20 to 30 if I want to pay it off, sell it, 1031 it, or simply keep letting it do its thing. Only you know what your investing objectives are and your goals.