If you buy in a poor niehborhood (Not combat zone) and get in for $36,000 (after fix up) on a home appraised at $63,000. Is it wise to take out a 100% loan on the proeprty if it will still cash flow?
These “blue collar” neighboorhoods are where working folks live! If they could afford better neighborhhods, they would probably buy.
As long as you get a decent cashflow after ALL expenses are paid, you want to use as much OPM as you can.
A $36K loan at 7% will run you about $240 a month (P&I). If you add taxes, iknsurance maintenance, management, and vacancy, you should still need to only get $350-400 a month…
I believe that Keith above misunderstood the question.
The answer is it is very UNWISE to do a 100% cashout refinance on an investment property (that is IF you can even find a lender to do it anyway), especially in a questionable neighborhood.
The max that you want to be leveraged at is 80% of market value. At that percentage, you’ve got some room to handle any possible problems. A couple of examples are the market drops in price or you have to get rid of the property quickly.
Hope it helps,