2nd 4 plex purchase, 1st with a mortgage. How to proceed

[Frank Jones]

Several years ago we bought for cash, 2 duplexes in bad shape for $165K. We've since fixed them up and everything is flowing smoothly along. They're now worth about $200K and generate $2000 a month with very little maintenance cost. We now want to use the equity (leverage) in them to finance the purchase of a 4 plex that needs work, again at $165K. They currently generate $1800 a month in rent but need at least $25K (maybe more) in repairs, some immediate, some not. I want to pay as little down as possible because I want to start renovations and need my on hand cash. I want my payment as low as possible so that cash flow is generated by the 4 plex so that they pay for some of there own repairs over time. I don't mind leaving all positive cash flow in this 4 plex for repairs for the next several years. What's my best coarse of action for financing?

1. Traditional 30 year mortgage with low closing cost

2. Business loan using both properties as collateral.

3. Some kind of interest only balloon refinanced in 5 years to a 30 year mortgage.

4. None of the above  

[Amanda G.]

For low cost, traditional mortgages are usually cheapest. But with all your equity, you may be able to get a business loan that is just as good. Doing some local bank hunting can save you lots of money. Good luck!