OfflineSo I have a question about financing. If I buy a house for 50,000 and I make a few repairs say 5,000 and the house is worth 100,000 Do I do refinancing to pay off my mortgage and have 45,000 for other investments.
This is just a example with random numbers???
If you find a good deal and do refinancing can you make money or am I confusing myself even more???
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You actually dont pay off your mortgage. You will refi to borrow whatever equity you have on the property. That will increase you mortgage and monthly payment.
And the money you receive from the refi would be cash and you can use it for working capitol. On buying other properties
So If I refi and I have 45,000 in equity and I borrow 45,000 now my mortgage payments goes up on the house as if it were a 100,000 k house?
http://sip.usapropertywholesale.com/
Yes it would
If you purchase a property for $50,000 and put $5,000 into repairs and then it is appraised for $100,000 by the bank, you could, assuming you qualify for a loan, refinance the property at 75% (called loan to value) of the appraised value, if it’s a rental or up to 90% if you are going to live in it. So you could get $75,000 (I'm assuming you are going to rent it) back at closing to payback the $55,000 used to purchase and repair the property. So you will have $20,000 left less closing costs to invest in the next deal. I purchased six properties this way, but the banks are less inclined to give you these kinds of deals. They are more cautious now because of the real estate downturn so you may have to shop for a bank that will give you a loan based on the appraised value after your repairs. Some banks will take the price you paid for the property plus the repair costs and tell you that your property is worth only the $55,000 you have into it. Then you end up with a loan for 75% of the $55,000, which doesn't give you enough to even payback your initial investment.
Remember the bank’s interest is getting repaid, so they are going to be most concerned with your credit, the cash flow of the property, your personal cash flow and then the value of the property. It’s much easier to borrow money from banks when you are prepared to demonstrate a solid repayment source to the bank.
Does this info apply to california aswell? I'm in the process of getting qualified for a mortgage, I got pre approved for 80k and don't know what to do.. Buy a primary residence because I'm currently renting or get an investment property? So these refi options still excist? It's just. Matter of poking for the right bank that wil finance you??
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Remember the bank’s interest is getting repaid, so they are going to be most concerned with your credit, the cash flow of the property, your personal cash flow and then the value of the property. It’s much easier to borrow money from banks when you are prepared to demonstrate a solid repayment source to the bank.
I'm also pretty new to this but I was wondering if you don't want to rent it out or stay in it how does the most banks react to that. Can you still get it refi at 90% loan to value.