All Forum Posts by: Daniel Kelly

I’ve never refinanced before (or utilized any creative financing strategies, although I’ve researched them at length). I bought my first rental property in 2020 at $290k. Since then, the market has boomed and I’ve been fortunate enough to now have this home valued at $380k on Zillow. I’m looking for ways to grow my portfolio and a cash out refi seems to make perfect sense.

My question is, however, I purchased this home during Covid with an incredible 3.2% interest rate. With interest rates now above 7%, it's made it almost impossible to find new opportunities that could even sniff the ROI I currently have. Does it make sense to refi such a great rate? I put down 20% originally so I'd essentially be getting all of my cash back out of the deal, which in turn makes my ROI infinite? Any advice / suggestions would be much appreciated !! Thank you!

0 Votes

Originally posted by @Bill B.:

Why would you bother buying if you’re planning on selling in 5 years? Do you think you’ll find a better performing investment in 5 years and be out of money to invest? You’re going to have 10% in costs to sell, so if it appreciates with inflation a couple percent per year you’ll only be even after 5 years. What if it drops 10%, then your plan is to lose 20% in 5 years? If it’s making money and you don’t sell it doesn’t matter what it’s worth. Just keep taking the money and use it to buy more.

Hi Bill,

Thanks for the opinion. I agree with what you're saying. It was worded poorly when I said "when I go to sell it in 5 years" . My concern stemmed from: this is a SFH, I eventually want to be investing in multi family (specifically apartment complexes) , so sell the SFH homes that I own and 1031 up. So having an asset that I would have to hold because I bought at the peak of the market was something I was mulling over. Anyways, I bought the property! Closed on it yesterday. I appreciate the feedback.

-Dan

1 Vote

Hi all,

This is my first post on the BiggerPockets forum, woohoo! I have a quick question that I'd love opinions on. I am investing in a market in CT, I currently have one SFH, and looking to add my 2nd. The dilemma i'm having is I'm concerned i'm buying at the height of the market.

The house I would be purchasing has tenants signed through May 2022, at roughly a 9% cap and 19.7% ROI. From everything I've learned so far studying real estate, those numbers are good!

However: Ever since Covid-19, the prices on homes in this area have SKY ROCKETED. It's a sellers market, and in this instance I would be buying a house that was worth 25% less just a year ago.

In conclusion: This property would have solid cash flow, but is it too risky to be buying a house at this much of a premium? My fear is 5 years down the line when I go to sell it, I will be taking a loss. Also this house appears to be in good condition, if that helps.

Thank you Bigger Pockets community!!

-Dan

1 Vote

All Forum Posts by: Daniel Kelly

Daniel Kelly has started 2 posts and replied 3 times.

Post: Refinance with today’s interest rates

Post: Cash Flow vs Appreciation Value. Help!

Post: Cash Flow vs Appreciation Value. Help!