Author Topic: We decided to buy, but not sure on what rental house to re-fi  (Read 573 times)

clarkfan1979

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We decided to buy, but not sure on what rental house to re-fi
« on: September 10, 2017, 08:37:10 PM »
After considering our options and feedback from contributors on MMM, I think we are going to buy a 3 bed/2 bath single family with a 2 bed/1 bath ADU and live in the ADU for at least the first 2 years.

Most of the single family homes on Kauai have ADU's attached, but most of the ADU's are 1 bed/1 bath. However, there are a few single family homes that have an ADU that is 2 bed/1 bath. We currently live in one now. Our plan would be to live in the ADU for the first 2 years and then move into the main house.

If we put 20% down on a 500K house our total mortgage payment with taxes and insurance should be around $2150/month. The rent on the main house should be around $2000-$2300 depending on what we find. As a result, we have chance to have the rent on the main house cover the entire mortgage, taxes and insurance. The market rent on a 2 bed/1 bath ADU is around $1500/month, which is what we currently pay in rent.

However, in order to put 20% down, I need to re-fi one of my existing rental properties. I haven't decided, but I am leaning toward option #1. We currently have 32K in cash.

Option #1:I am 5.7 years into the loan on the Florida house. It's currently worth 235K and I owe 77K at 4%. We would probably re-fi into a 4.25% non-occupancy loan. We could pull out 105K.

Option #2: I am 8.3 years into the loan on the Colorado house. It's worth 365K and I owe 112K at 4.75%. We would probably re-fi into a 4.25% non-occupancy loan. We could pull out 175K.

SimpleSpartan

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Re: We decided to buy, but not sure on what rental house to re-fi
« Reply #1 on: September 12, 2017, 12:31:02 AM »
I would re-finance the Florida house and work on aggresively paying down the Colorado home to free up more cashflow.

Gin1984

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Re: We decided to buy, but not sure on what rental house to re-fi
« Reply #2 on: September 22, 2017, 07:42:59 PM »
I'd do the reverse.  If you take from the Co house, you lower your interest rate plus get money out vs Florida which you are increasing the rate.  Go with refi of the Co house.

tralfamadorian

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Re: We decided to buy, but not sure on what rental house to re-fi
« Reply #3 on: September 23, 2017, 07:37:41 AM »
I'd do the reverse.  If you take from the Co house, you lower your interest rate plus get money out vs Florida which you are increasing the rate.  Go with refi of the Co house.

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