Hello all,
This scenario may seem basic to some but I'm still a bit confused.
Background:
We (my family and I) purchased a 12 unit apartment building (all 2br) for $410,000 back in 1998. There has been tremendous growth in the area and there are comparable buildings that are selling for 1.1M-1.2M. There are a lot of condo conversions that have been completed and sold out as well as quite a few conversions still going on nearby. To sum it up there’s a bit of excitement in the area.
We won’t be getting a new appraisal until the end of the year, but we know there has surely been a good amount of appreciation and of course growth in our equity in the property. I’m not sure about the best way to handle that equity once we do get the appraisal. We currently owe about $265,000 on our mortgage.
In theory, what is the best way to cash out a portion of the equity we have in the property? We of course want to leave at least 20% of our equity in place but would like to cash out the rest. Because the interest rate we are currently paying is 4.875%(arm), I’m afraid a refinance would leave us with a higher interest rate. On the other hand I don’t think a Equity based line of credit would be so great because the interest would surely be greater in that case as well.
I’m a bit lost. ??? Are there any other viable options I’m missing at the moment.
Thanks in advance to anyone that can lend a bit of insight.
-Howard