Should I refi my rental, before or after my next mortgage?

Should I refi my rental, before or after my next mortgage?

I recently bought a house to rent out. bought it cash and the repairs are almost done. I’m currently renting a room from my brother, but his rent is cheaper than the amount of rent I’ll be able to get from that house.

I’m still looking into my next purchase though. I’m open to moving into a place if it would get me better loan terms, but I’m also open to getting another rental. I have about 10k still saved up, so it would have to be something on the cheaper side which is ok since my market has typically cheap real estate. especially if I can find something that needs repairs. I was also thinking it might be a good idea to just refinance my rental house, and get my equity out so I could pay cash for the next property. I’ll likely actually do both of those, but not sure which I’d need to do first. kind of afraid how one would effect my credit pertaining to the other.

I have like a 790 credit score and a steady job making around 35k a year(not including the rent I plan to receive) my business partner has talked about changing my pay scale though (currently I’m salary) and letting my checks fluctuate more with our business cycle. this would mean lower checks in the winter but much higher in the summer. I’d be getting a 5 grand raise, but it would look bad on my income statements if I showed them in january. still might not actually do that though, it’s just an ongoing discussion.

I’d love your thoughts!



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2 Replies to “Should I refi my rental, before or after my next mortgage?”

  1. Hello there and welcome to the community! I see in your post history you tried to post a new thread and got caught in the auto spam due to lack of comment karma. I have manually approved you. If you incur this issue again feel free to message the mods using [r/realestateinvesting](https://www.reddit.com/r/realestateinvesting/) as the recipient.

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    Cheers,

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  2. > I’m currently renting a room from my brother, but his rent is cheaper than the amount of rent I’ll be able to get from that house.

    Awesome. Great way to start out and build your savings, cushion them, and allow your investable money to grow. Just make sure you don’t overstay your welcome and remain on good terms with family. If it works, it works!

    ​

    > I’m also open to getting another rental. I have about 10k still saved up

    On the low side. I’d caution you to ensure you have enough reserves for your existing rental. With a $35k/year salary, you want to ensure you don’t over leverage yourself either. Do your own due diligence and make an informed decision.

    ​

    > I was also thinking it might be a good idea to just refinance my rental house, and get my equity out so I could pay cash for the next property.

    Could be a good idea. Come back with the numbers? Share them so other’s can give their opinion. Rent income, total expenses including old mortgage costs and then again for new proposed refinance costs with new payments.

    ​

    > my business partner has talked about changing my pay scale though (currently I’m salary) and letting my checks fluctuate more with our business cycle. this would mean lower checks in the winter but much higher in the summer. I’d be getting a 5 grand raise, but it would look bad on my income statements if I showed them in january. still might not actually do that though, it’s just an ongoing discussion.

    Considering consulting your CPA/tax advisor and seeing if filing your taxes on the quarter or on the half **strategically** could help you with credit, and financing. If you show a lot of income in the first half of 2020, it may benefit you to file that early and be able to show it to lenders. I am not a CPA or lawyer.

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