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Good idea in what sense? Refinancing investment property is one of the most expensive loans out there and asking for cash out makes it even worse.
It depends on your particular situation and needs.
Why not cash out refi? Put the money back to good use and buy more properties. If you buy at a whole sale price, fix it up with new items, they should easily last you at least 10 years. By then you can decide if you want to keep the house or sell it. If you find someone else's money to do a purchase and renovation of the property, you can get 75% to 80% with most banks in terms of ARV, since you as the investor have absorbed most of the risk and now have a marketable asset.
If you need the money it's better to pull out tax free cash rather than sell the property.
Be aware that the portion of the new loan that exceeds the old is no longer deductible as far as loan interest expense for the investment. And if you do this too often, you'll someday find that the remaining equity in the house is too little to sell, take your gains, and pay your taxes.
Depends on what you intend to do with the money.
Alonso, we would need more info to be able to give you an educated yes or no. but everyone has really hit the nail on the head; if you pull money out and the property still cashflows, and your going to do something with the money that will earn you a ROI of at least the interest rate your paying on the loan then yes it makes complete sense. Keep in mind your best bet for an investment property is with a 30 yr mtg right now there are lenders still offering some great rates if you have the credit score and can prove your income. good luck!!
I have sold my house in CT and currently living in a rental property in NJ. I want to buy single family home as my primary residence and a condominium as an investment property. Can I pay the down payment for both these properties from the funds available after selling my CT house ?
Depends on what you are doing with the money and what type of cash flow you are likely to have after doing so. If you still have a posotive cash flow or have confidence that your other investments will be able to support a negative cash flow then perhaps it's OK for your situation. Remember though that you do not receive dollar for dollar credit for your rental income so if you need to refinance this or other properties in the future you will likely increase your overal debt to income ratio and may make it more difficult to qualify for other mortgage loans. Then again perhaps you can raise rents and offset the potential problem?
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refi for investmnet property.
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Is it a good idea to refi to cash out for a investmnet property?
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