Refinancing my old primary (now a rental) for cash-out

[Ben Layman]

Hi everyone! I'm new to this community and this is my first post here :)

I have a question I was hoping you guys could help me with.

I have built up quite a bit of equity over the years paying down and renting out my prior residence. This was my first house and the neighborhood I bought in has really taken off. It's been cash flowing between $500 -$600 per month over the mortgage since my fiance and I moved out in November 2018. I thought about selling it and using the cash for something else but but I'd rather do a cash-out refinance and keep the property because I put a lot of money into re-doing the HVAC, painting, bathrooms, landscaping etc. I'd like to capitalize on those investments for a little while longer. My goal is to use the cash as a downpayment for more single or multi-family homes and increase my revenue stream. I reached out to my lender about doing a cash out (Wells) and they said they are not doing any cash-out refinances right now because of the market.  I also asked B of A and they said they can't lower the rate and it wouldn't make any sense to re-fi. So is my only option to move it over to a commercial loan and have to re-finance every 5 years, plus pay the higher interest rate?  (Side note; i have another separate rental property that i have a commercial loan with and it's a 5yr fixed/25yr amortization with a 4.95% rate.)

Here's all the information on the house and loan.

Current Loan with Wells Fargo principal balance: $139,672

Conventional 30yr loan that started in Feb 2012

Property estimate value $312,000

Interest rate 4.125%

Monthly mortgage: $1,160 (includes principal, interest, taxes and insurance)

Monthly rent: $1,700 (Tenants are in a 1yr lease that expires February 2021)

Would love any advice and to hear what you guys think! Thanks! 
-Ben

[Randall Alan]

If I ran my numbers right your payment would go up by at least $400 if you did the full $95,000 cash out, leaving your cash flow at something like $140 a month, which is pretty measly in my book.  Plus, you would be refinancing with an investment property surcharge since it’s no longer  your primary residence.... and then there are the refi costs which are likely to be $2,000-3,000 perhaps.  

I would probably think about selling it outright to extract the equity and buying 2 additional (cheaper) properties with the proceeds. You would end up with more ROI and be getting appreciation on two properties instead of one.

Or, not doing the full cash out so your monthly net is better if you are going to keep it.  

Randy