Over the last two years in addition to my corporate job I helped a friend run his business of 40 properties - renovating, leasing, and general property management. This year I personally purchased a group home in poor shape and renovated three floors. Purchase price was 660k. After four months, I rented the house and now after six month I'm now looking at refi options to buy a second property. I'm not a great finance person, more of a business operator and reno guy, so looking to see if I should cash out refi or use a HELOC for my next home purchase. Curious how others have expanded. Currently, I'm generating 1,220 over my mortgage of $3,280 / month. Recent appraisal was 900k. Here are my options:
1) No cash out refi. Monthly payment goes to $2,725 at an interest rate of ~2.8%. I can use a HELOC up to 210k tied to the PRIME rate (3.75%? and variable) for my second house.
2) Cash out refi at 75%. Monthly mortgage payment goes to $3080, interest rate is 3.625%, a completely new mortgage at 675k, and I can pull out 85k tax free (not treated as income).
Curious how others have scaled up and paid themselves back to build a small portfolio. Many thanks.
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