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Updated over 6 years ago,
Advice on whether to refi cash out or just keep loan
Hi fellow investors! Purchased a 3 unit building in NYC at a very good $580K. Financed 80%, renovation cost are now around $135K. Building isn't all the way finished but I got top floor leased signed ($2300) and received first month and security. Second unit will be finished in about three weeks and Im hoping for a mid September move in. Listed today for $2000 and I'm getting lots of interest and I'm very confident it will rent fast. Last unit will be finished mid October and I anticipate it renting for $1500. Current mortgage, taxes, insurance is $2900. Heating cost and surprise repairs not factored into that $2900. BARRRR is in full effect, but unsure whether I should refi and cash out a bit.
My concern is that my rate is 5% and current rates for investment property is closer to 6% now. I'm eyeing another deal, and while I can source the 20% down with cash on hand and HELOC from main home, I would prefer to have a a good amount for renovation. I will be very thin post purchase and will then have to rely on busting my *** at work (real estate Associate Broker) to get some good listing commissions. Building I'm in talks with is a 5 unit and creates cash flow similar to what I just bought, give or take how bad things are when we start to renovate.
Will lender be willing to refi with two units rented right away, or will it have to sit seasoned for a bit? Goal is 20 units over the next 3-4 years and this will get me a third into that goal, and I don't want to miss out, but then I also said thought to myself that Im being to ambitious, if such a thing even exist. Should I refi at higher rate and cash out the needed deposit for new building?
Current loan $430k
Post reno market value $900k
New Building $775-800K, post reno $1.1
Thanks in advance.