Questions regarding cash out refi on my rental

[Alex Nameishi]

Hey guys,

I bought my 3 unit rental 3 years ago for 505k. I put 5% down with an fha loan at 2.4%. I’ve done a good amount of rehab myself and modernized the units. I live in one of the units and rent out the other 2. I’m cashflowing about $600 a month right now plus I’m living rent free.

I’ve been able to save a lot over the years and now I would like to buy another rental.

Prices have skyrocketed in my area and based off comps, I believe my prop would appraise for around $700k.

My question is, what are my cash out refi options? Based off the numbers I provided above, how much could I get out? I understand my new rate would be higher than my original 2.4% but I would like to convert my fha to a conventional loan, so that I can use an fha loan on my next prop and not have to put down 20%. I would house hack my next house too so that I can abide by the fha rules and so that I can rehab the property myself like I did on my first deal.

Any intel or suggestions would be greatly appreciated. Thanks everyone

[Andrew Postell]

@Alex Nameishi I would suggest to explore a HELOC option first. Chances are your rate would more than double here. So, a HELOC would keep your current rate in place and still allow to take cash out. Costs to get one would be lower too. There are things to know about any option but would suggest to at least get details about a HELOC in your fact finding.

Hope all of that makes sense.  Thanks!