Posted by Ed Moore on January 06, 2004 at 18:27:25:
Off hand, you’ll have to wait six months to a year to refinance at the higher value during which time you’ll have to collect rent to pay on your lines of credit. That means you’ll want to keep a reserve of cash in case your renters decide to be late one month or two or three or more. Or the water fills up the basement and you have to hire a plumber to drain it, diagnose the problem and fix it. Or your water heater goes out or that $2K in repairs ends up being $4K or anything else that can go wrong does.
You’ll also have the closing costs of at least title and transfer fees to contend with. That won’t be too much if the whole thing is private. Of course if you do that, you’ll be the one in charge of making you have sure all your ducks are lined up in a row legally speaking.
So as long as your renters pay on time for six months to a year(whenever you’re able to refi) and the rent is more than your interest payments and monthly property management expenses, you’ll be fine. Really, as long as you keep that stuff in mind and the property remains in good condition and maintains value until you refi, you’re fine.