Refinancing Income Property - Posted by Todd Anderson

Posted by KL on April 08, 2001 at 24:27:47:

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Refinancing Income Property - Posted by Todd Anderson

Posted by Todd Anderson on April 07, 2001 at 23:35:30:

I can get more information about this by picking up the phone, but I’d like all of your input also. Besides, no one else is up at 10:30 on a Saturday night!

I’ve got a non owner-occupied duplex, fully rented, worth about 150K. I owe 108K on the first and I want to refinance at 80% (120K) and pull cash out. There is also a second mtg on the property that I want to leave in place. It is a fixed interest, interest only loan due in a balloon payment in July of 2002. It is a $13,500 loan with payments at 9% a year. ($101.25/month) I have a 3/1 ARM on it now, which adjusts in July of 2002, at 7.05%. The few lenders I have spoken with all want about 8% with 1 point up front. For what I make a month off of it, that puts me in negative cash flow. I had always planned on selling it in three years and then using the profits to buy another one, but if I can get the money out of it now and still maintain a positive cash flow, plus use that borrowed money to buy another property, all the better.

Any suggestions on how to do this, or do I simply need to keep searching?

Thanks for anything.


Re: Refinancing Income Property - Posted by Earl

Posted by Earl on January 17, 2002 at 09:16:58:

I was browsing thru the archives and saw your post from a few months ago. But since it hasn’t been 3 years yet, maybe my ‘anything’ will still help.

If you want to sell it eventually anyway and buy something else, why not refinance it - squeeze cash out of it until you can’t stand the negative cash flow, then sell it as part of a 1031 exchange? You could do that at any time in the next 3 years. Just my $0.02. Good luck!

Re: Refinancing Income Property - Posted by LisaK

Posted by LisaK on April 08, 2001 at 07:33:38:

You need to get the second mortgage holder to subordinate their loan to your new first mortgage. If the holder is a bank this will not likely happen, but if it is an individual you might be able to talk them into it. You can probably have your title company prepare the documents for you.