Should I sell, cash-out refinance & rent or just leave as is?

[Joan S.]

Hello All!

Fair new here but would appreciate any insight or advice!

I was previously in the Army and bought a brand new single family home in El Paso, TX using my VA loan in 2012 for $146k. I moved back to PA because this is where I'm from so I left it rent it out (landlording from afar). I put solar panels on the home so now its should valued at about $200k.

Here's what the numbers look like currently:

Mortgage balance: $94,948

15 year fixed mortgage at 2.5% (6 years in, 9 left to go)

Interest: $197.75 monthly

Principal: $776.58 monthly

Escrow: $536.95 monthly

Total Monthly: $1,511.28 (tenants are paying only $1,000 but I told them $1,600 or get out so they're leaving on Oct. 1)

Taxes: $5,268.10 yearly

Insurance: $1,002.15 yearly

If Renting:

Property management company says I can get a tenant for $1,500 to $1,600 a month (one suggested starting at $1,700 due to little-to-no electricity bill).

They take one months fee to set-up place a tenant in, 10% every month to collect rent, and $40 fee per maintenance coordination.

Refinancing offers:

I have 3 offers so far and working on more, all are 30 year fixed/conventional. Since this a cash-out refinance on an investment property and I'm also not in the state of Texas many lenders won't even touch this and the closing cost are high with higher interest rates. The cash back is pending on what my house appraises at, which could be $190K to $210K.

Summary:

All 30 year fixed	Offer 1:	Offer 2:	Offer 3:
Interest Rate	4.25	4.375	4.875
Total Closing Cost	$103,734	$108,913.33	$106,790
Base Loan Amount	$150,000	$150,000	$157,500
Cash To Borrower	$46,266	$41,870	$50,710
New Monthly Payment	$1,275	$1,285	$1,327
LTV	75%	75%	75%
Estimated Home Value	$200,000	$200,000	$210,000

Offer 1:

Rate: 4.250%

Loan Cost/Closing Fees: $8,816.24

• Loan Cost: $8,775
• Initial Escrow Payment at Closing (Taxes & Prepaids): $3,273.15

Loan Amount: $150,000

Discount Point: $2,917.50

Cash-back: $46,265.76 (home estimated at 200k)

New Monthly: $1,274.58.16 ($833.50 for Principal and $494 for taxes & insurance)

Offer 2:

Rate: 4.375%

Loan Cost/Closing Fees: $13,995.33

Loan Amount: $150,000

Discount Point: $2,062.50

Cash-back: $41,879.02 (home estimated at 200k)

New Monthly: $1,285.88 ($748.93 for Principal and $536.95 for taxes & insurance)

Offer 3:

Rate: 4.875%

Loan Cost/Closing Fees: $11,872.00

• Loan Cost: $9,000.88
• Initial Escrow Payment at Closing (Taxes & Prepaids): $3,248

Loan Amount: $157,500

Origination fee/2.125% of Loan Amount (Points): $3,346.88

Cash-back: $50,709.90 (home estimated at 210k)

New Monthly: $1,327.16 ($833.50 for Principal and $494 for taxes & insurance)

Other:

I'm leaning towards option 1 because of the better rate, lower closing cost and lower monthly. Lender 2 doesn't want to give me what the numbers look like with a $200K estimated value so its hard compare apples to apples.

Why:

• 1. I want to re-establish my VA entitlement (allows me to put ZERO money down on a property).
• 2. I want some cash flow, my monthly right now if bleeding me out.
• 3. I can use this cash to use on another investment property either as down payment (my not be necessary because of the VA loan) or used to refurbish.
• 4. Overall, I'm trying to get into BRRRR real estate investing. I'm currently looking at a 4-unit multifamily so I can live in one and rent out the rest. I need to live in one in order to get the ZERO money down deal.
• 5. Maybe selling is the best route to go but I think waiting until Spring would be best to get the highest selling price. I also didn't want to pay capital gains taxes on it.

Let me you what you all think! Thank you in advance!!