This is my first post but Ive been reading for a while. I would like to start off by saying thank you to all the knowledgable foks here that are willing to help others and share from their experience.
Let me run through my scenario. Purchasing house for 60K that after rehab should appraise for between 85k and 90K based on comps in the neighborhood. Looking at financing through local bank mostly because of fast closing and low closing cost (6.25% interest rate though). Rehabbing house and doing all work myself for about $4000-$5000 in cost and then renting it out. I hope to do a cash out refi at 6 months for 75% of the 85K new appraised value ($63,750) paying the original loan off at a hopefully lower rate. Am I missing something? Anybody see any holes in my plan? I dont want the cost of the cash out refi to pin me into the 6.25% original loan longterm.
Can someone tell me approximately what the closing cost and rates would be on the cash out refi on a single family investment property after owning it for 6months and doing the rehab? I understand that any numbers would just be estimates and that a lot can change in 6 months. The refi would be for 15 years.
I have some experience with rentals and rehabs but all the borrowing I have done has been real simple stuff.
Long term lurker, first time poster.
Your post brought me out.
I would not bother refinancing.
6.25% is a good rate for investment properties.
I pay my private investors 6%.
Also, it’s very unlikely you would be able to pull out more than purchase+rehab costs.
It sounds like you’ve already secured a loan for that.
Also, most banks want you to use a contractor for rehab vs doing it yourself.
After a year you can refi 70-75% of value but you’re still at 63.5k and you’ll have 5k or so in closing costs. Not really worth it.
When the market recovers you might be in a better position to refi due to higher property values and it will make more financial sense for you.
I do what your doing, but in sort of reverse order,I make the initial purchase with a HML based on 70% of ARV,do the repairs, put a renter in, then refinance at 75% of new ARV into 30 year conventional financing,the cost of the second close in a property in that price range is normally about $4k (which is covered by the difference in the 70% HML adn 75% convnentional loan