Indianapolis - Cash Out Re-fi scenario

[Rodney Kuhl]

I recently purchased a SFR in the Emerson Heights area of Indianapolis for $39k. I know that a house just a couple of streets over is under contract to be sold by another investor for $65k, and the appraisal came back at $65k. My house is very smiliar, both 3 bedrooms/2 bathrooms and around 2000 sq ft. My current projections have about $200/mo in cash flow, but because of the great deal I got on this house I have a good amount of equity. If my house were to appraise at even $60k, I could do a cash out re-fi and pull about $9,800 grand back out. My cash flow would decrease to about $90/mo, but I'd only have $2,500 in the deal and my cash on cash returns would project at 43%. If it appraises at $65k, I could actually pull about $1,000 more than I originally put down to buy the property, but my cash flow would drop to about $65/mo. But at the same time, I'd have nothing in the investment, the returns would be infinite, and it would free my money back up to buy another property.

In this scenario, what would you do?

[Coire Fox]

What expenses did you factor into your cashflow calculation? Taxes, maintainance, etc...

If you are confident in your ability to maintain the property, I would take the cash for sure. How much does the refi cost you?

$9800 is 49 months worth of rental income. Can you get a better return on your $9800 in the next 49 months?