Duplex: refi or sell?

[Erin Schreiber]

I have to either refinance or sell a duplex in the next 6 months as part of divorce proceedings. Currently, it is rented under market value, grossing $2700/mo total , with a monthly mortgage payment of $1561, and me paying utilities around $500. I could raise the rent to probably $3100/mo total. I could pay about $6000 to have a second electric meter installed, so the tenants would be responsible for utilities. 

I’d guess the property value right now is above $450,000, and I currently owe $150,000.
I’d hate having to pay capital gains on a sale, so I’m leaning toward just refinancing. Is there a specific tool I should use to make this analysis? Or a rule of thumb I should lean on? Or additional info I could provide here to get recommendations?

[Joel B.]

Hi @Erin Schreiber,

I've been through your situation, so I want to encourage you to hang in there. You will make it through. I was forced to sell the house that I had and I highly recommend you avoid that path. I would definitely look into a cash-out refi so you can get the funds needed to pay off your ex. Keep control of the property if you can, you can definitely recover from this one.

The tools to use is a mortgage calculator. There are a bunch of free ones online. Contact the David Greene team (or whatever mortgage broker you would like to use) to find out what you might expect the interest rate to be on the new loan. That, along with the amount of the new loan (I'm guessing around $300k), will get you a new monthly mortgage number. That will give you a good idea of where you will be at coming out of the divorce.

The numbers you provided look good on paper. I think you can easily survive this one and come out stronger on the other end.

Is that the information you were looking for? If you're wanting to dive deeper into the numbers, use the Rental Property calculator in the Tools menu at the top.

Hope that helps. Blessings!