My quick thought is 40k @ 17% for a year... so quick math gives a cost of $6,800 to borrow that. Ouch. And with adding a 2nd mortgage plus the CC load, not sure if you could refi that down.
With refinancing I was thinking of taking out loans from family/friends that will help me clear the CC debt in an instant and instead pay them off at 5-10% interest. I will need some time to convince/explain them and the deal is happening now so I need to move on it now.
Refinancing the other unit is not possible, the bank knows Im renting it out and they require 30% equity in rental units, which is what it has currently. This is the norm here in Norway :/
But lets drive a bit deeper - I'm assuming you are flow positive on the Unit1, and that is being rolled into paying off the CC for Unit2. Is the -2k/yr after accounting for Unit1?
Unit1 is cash flow positive with 2k/year. Unit2 will be cash flow negative with 3k when I include the interest from the CC debt, and positive 2k when its paid off. So in total both of them will net -1k now, and +4k when the CC debt is gone.
Do you need the 20% down? Can you get a loan with PMI for the first year and then refi once you are below the 80:20 ratio? Maybe do this by moving into the apartment for a year or two (then your rent is going towards PITI).
I have tried finding ways around this but rules are strict and I need atleast 15% down. Most banks want 30% down but minimum requirement is 15% by law here (Norway). I could try find someone to put down equity for me, but my family is not in a position to do that and with friends its just way easier asking for a loan (even asking for a loan is abit embarrassing for me).
Non-traditional loans - I'm thinking something like Prosper or Lending Tree. Not sure what their rates are, but I'm guess it's better than 17%.
I will try check out other lending institutions. For now I've just browsed the many consumer debt/CC companies we have.
Can you afford to pay for 3 mortgages (your rent and 2 rentals) and the heavy CC bill if you have a vacancy? That seems like a huge debt load.
Yes, I can afford it. I save about 3k/month. The rental income from both units will be abit above 3k/month and they will be slightly cash flow negative with the CC debt. So this means with complete vacancy my savings would be zero every month, but I'd afford it.
If I was in your shoes, I'd skip this deal. Too much risk by increasing the debt load you have. You made it sound like 1 or 2 of these deals pop up each year, I'd just wait for the next one and double down on saving so you don't have to skip the next one. Another 12 months of savings won't mess with your FIRE plan, were one bad turn with that much debt could completely derail you.
Thanks for your honesty and good tips. I agree there are risks that can make this an unprofitable venture.