How to Refinance a Rental Property
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How to Refinance a Rental Property



    Would it be a good idea to buy a distressed house with the owner willing to do owner financing and then rehab to build equity then refinance ? I'm thinking This option would be a good option considering you avoid having to find a hard money lender and avoid the bank until you have the equity to refinance. Is it a good idea When it comes to buying a house with owner financing and would it work going this route ?

  • Lordslade1

    thanks Morris, I have watched you for years without knowing that you were in to investment properties. Then I saw you on bigger pockets podcast and I became even more of a fan. Great video I found this just as I was thinking of refinancing myself, and starting a second investment property.

  • Living Life

    great vid it seems like you may have to add some $ onto the re'finance $ to get another property also what's a good way of getting to know my local market?
    thanks for the vids

  • ItsInTheDetails

    No one talks about the fact that once you get like 3 mortgages you won't qualify for anymore. So you can't repeat more than twice.

  • Jane Heimbichner

    Love your info but just one problem. Your prices for houses are so low. I'm stuck with high priced rentals in California. Wish I could get houses for 50K like you say.

  • jakobion

    Does refinancing only work when you own the property free and clear? What if you had to take out a loan or get an investment you have to pay back to buy the first property?

  • StirCrazy

    Where are you getting 4% on an investment property? I was just quoted 6.875% in Oct 2017. I was told we would get a better rate -2.5% or more on our personal property. I have a rental property that is nearly paid for where I have over $100k less than 1.5 yrs remaining on mortgage and a double I live in that which has around $100k in equity, which has another 12.5 yrs on the mortgage.

    If I were able to take $100k out of one and invest it in Rental Income with Morris Invest, which property would you suggest and what could I expect for positive cash flow each month?

  • Sam Mehta

    Thank you for the video. I have a clarifying question, do I get a loan against the X % of the appraised value of my rental property or just X % of the equity (value minus loan) I hold in the property?

  • Jason Jones

    Hey Clayton, to refinance do they look more at the house/ equity or do you still need to qualify with income and proof of funds?

  • buffdep

    Hey Clayton You may have talked about this if so let me know were to look.We buy houses in the midwest and we live in CO.You say to work with my local bank in co to refinace my rental in for example Ohio.They are going to refinace my house if its free and clear out of state?Also alot of banks have a minimum amount of value before they will refinance a house how are you getting around that with first house purchase?Thanks

  • Jacob Zola

    You're not being clear about net worth. Your net worth increases with your equity. If you buy a home using a loan for 10000 and it's worth 15000 your net worth increases 5000, not 15000.

  • Nick Krolicki

    Hi Clayton – I'm a big fan of your podcast and these videos. My question on this video is this. Does this also apply if you own the house in an LLC? I was under the impression that most banks won't lend to LLCs. This is a strategy that I'd like to implement and the LLC thing concerns me. Thanks.

  • Pavel Khaykin

    Great video Morris. Question for you: what is your cash flow goal when you handle the cash out refinance? If a property cash flows $500/month with 30% initial down and than a year later you do the refinance and are able to take out most of your initial downpayment and in return your cash flow drops to $350/month while still paying off the mortgage by the rental income for example – do you have criteria you try to achieve which each cash out refinance you do? Also what is your opinion on the fact that $4-$5k closing fees are taken out each time you refinance ? Thanks in advance 🙂

  • D G

    As i have followed you for some time I know you buy your properties in an LLC entity, when you refinance with a bank do they let you hold a mortgage in that entity? If so, do they then treat it as a commercial property?

  • Christophe Alise

    Great channel and valuable information. Quick question on the topic of this video: How do you refinance a rental property that is owned by your LLC?

  • Lerpheng Vang

    So I’m questioning myself… if I own a home free and clear and I refinance. Would I have to pay the loan back? Because wouldn’t that basically be my equity? I’m confused.

  • Natural Sistar

    With this method I start off owning the home free and clear. Then I buy a house pull it it refinanced. Now I have 2 mortgages then 3 , 3 etc. what method do I use to pay these off?

  • bluekomand

    Clayton, could you give a specific example of a property worth $20k-$60k, rate, length of the loan, rental amount, loan type, and amount due on the loan every month so I have a better understanding of the exact mechanics of this?

  • Myroslav Barsukov

    Where you find those houses for 20-50k$. Which state you operate in. I'm from Canada but never heard about such a low prices.

  • Greggy Pearls

    Clayton, What do you think about refinancing your primary mortgage, pulling out money about 80k and getting 2 props like that?

  • irockbenz Coupe

    is there any limit to how many times you can do this and how does it work if you bought the property with a loan and not outright with full cash.

  • DJ Grier

    Wow! Great advice, thanks for sharing!

    I'm just a little confused on the snowball effect. Do you refinance the second property to pay off the first property's loan, then use the remaining cash to buy another property? Or, use all of the cash-out refinancing money to buy another rental property, while you keep the mortgage on your first property, allowing the tenant to pay the mortgage over the next 30 years?

  • William Jones

    Hello Clayton , I agree this is the best channel and am looking forward to doing business with you in the future. I have a quick question, let's say I just bought 2 houses with a Heloc and I have a LLC. Will I still be able to bundle and refinance these 2 homes to take out the 75%?

  • jiaozi0323

    Hey Clayton, does this refinancing process base on a paid off property? What if I bought a property with 80% loan. What to do with the increased value when I still have the mortgage?

  • Trickster0514

    Hello Clayton, when you say refinancing of the paid off home you are talking about getting a HELOC for that house right? Because i thought you can do refinance if you are paying a mortgage. That also sound like Home Equity because you said they cut you a check…would you mind to clarify for me?

  • Reality Investments

    I have a rental was at one point primary still pay mortgage 529piti getting 1175 a month owe 57k worth 100k what's your thoughts 🤔

  • Jimi O

    So do I have to find a local bank within the area of the rental property or can I stick with a local bank near me (in a different state) and still get the refinancing?

  • Martin Thabang

    I don't get it. Please expand more on this…What makes this different from having 40k cash, putting 10k and financing the rest to get a 40k property. Then you buy 4 properties with that 40k instead of buying one, refinancing, another and another?
    Don't you end up with the same result of having your property financed by the bank?

  • George-NY's Premier Contractor

    would you recommend a lander who is reputable for this purpose, i have a hous id like to get cash out.tnx

  • Charles Johnson

    I know it depends on business plan, goals, strategy, etc… What do you think is an acceptable loss in cash flow after refinancing that paid off rehabbed forced appreciation property?

  • 5ko

    what if you'll end up with only 100$ profit because of all the expenses, property management payments, taxes, loan payments etc?

  • Michael Bacile

    Hey Clayton, is equity only the difference in value of the home from purchase/rehab/arv? Or say your tenanant pays the rent for a year, can that have a play in how much equity is in the refi also?

  • Some Scorpio

    My local bank only offers 75% LTV on investment properties (I've seen some go as low as 60% LTV). After closing costs, it rarely makes sense to cash-out refi unless I've built significant equity in the property. Don't get me wrong, it's a great strategy! Just wish more banks were willing to do 80% LTV on investment properties.

  • Zach Dellinger

    Could you do a video on closing cost? Isn’t closing cost a major cost of financing, especially on lower cost homes as a percentage of the cost of the home. Thank you.

  • Randy Campbell

    From your experience what have you seen in terms of the types of loans that banks issue on investment properties? When purchasing my first rental home the bank would only offer me a commercial loan and said they could not do fixed rate loans on investment properties. Is this typical or should I be looking else where to refinance? My current loan is 5.25 variable with a cap of 11. Any guidance would be greatly appreciated.

  • Stephen Williams

    There is a hotel that is being used as a multi unit rental which also has a bar and restaurant. It values $750k. The owner is willing to finance 1/2 of it at 5%. How would you go about financing this entire deal?

  • Bokchee 88

    After what period from buying first rental property, would be great for someone to do refinancing for next investment property?

  • Andres Gomez

    I bought a house for $40k. Put $12k down and financed. What will my refinance look like? Is it still 75% of $40k? Or 75% of equity after appraisal?

  • Chinki Choro

    just a question plz anybody…… I dont really understand if i buy house for 20k suppose on 100% finance and then do a refurb and get it appraised for 30k. My mortgage on that was 20k to begin with now i call pull out lets say 80% of that 10k which is 8k……. now i have re-mortgage of 28K- hw is that gud idea? or is it correct? im really confused. im pulling out money which i have to pay back??

  • Jay Gee

    Hello Clayton , so I might be getting this a bit confused but when you say 'closing on the loan' that you own free and clear (Loan A). I don't understand how if the bank gives you a refinance loan for that $37,000 (Loan B) and you use it to buy more properties, how will that original loan A be paid in full if they are say a private lender with a shorter term loan. considering that the rental income will only pay the second Loan B. Would help a lot I'm still learning how these refinances work, thank you.

  • Matthew Angelette

    Won’t your monthly obligation go up and your cash flow for that property decrease and although you get another property you also get more debt.dti ratio will prevent you from qualifying for more careful with this strategy

  • Piero Cominges

    Clayton… love your videos. Long time fan. Question. I’ve heard you say you like Dayton OH as a market to invest. When I do a search it appears that all there is is “D class” properties. Maybe I’m misjudging. Why do you like Dayton??

  • aj smith

    you have to remember when you bolt the house it cost you 40,000 borrowed + interest. And if there going to give you 60% LTV that's only 24,000 you still have to pay the man you borrow the 40,000 from + interest. I just don't see how it can work.

  • Andreas Georgiou

    I am not sure if this is ;applicable to my country. I got a loan from my local bank for 100K and they would like to know where i spend each cent of the 100K to build my house. If the electrician wanted 10K then he would give me the invoice, and i would go to the bank to free me the 10K from 100K to pay him.

  • kross keyy

    So you pay the 75 % ltv back from the first house using the second house monthly income till its paid off the repeat? If you buy cash ?

  • kross keyy

    Over how long do you have to pay the money back you get for the equity in your home? Is it lesser than the money you'll receive from the second units rental income ?

  • Miljan Vukovic

    I'm still having trouble fully understanding refinancing. Question: The initial purchase of the home–was that using a loan from the same bank that you refinance with (does it even matter?). I'm asking because then you have the first loan that you are paying a mortgage (+interest) on monthly that is hopefully being paid off by the tenant in the first property that was purchased and rehabbed. Then, while the first property is cash flowing, you appraise the first property and get a loan in the amount of ~70-80% of that appraisal in cash to use for another property to purchase and rehab. Using this second loan (refinance?), you repeat the buy, renovate, rent process, and now you have two loans/mortgages that you are paying off on two properties. Am I missing something? When I write it out like that it makes more sense, but still feeling confused for some reason.

  • Bojan Stankovski

    So, when bank gives you the check with the new loan, your are not oblique to spend that money on rental property, you can spend it for example renovation? By friend got refinance on duplex and bank gave him 500k. So he bought 2 single family rentals and the rest put on renovation and rainy days. Is this allowed, to spend that money on anything 😕

  • jesusteama7777

    Do you recommend buy the property under and LLC, and then refinance under the personal credit to get better rates?

  • John Doe

    Suppose you bought your rental property cash, how can you get money out of that property to buy more real estate

  • computerfastrepair

    morris if you had 100k would u buy 2 houses for rental income or would u buy 1 house that gives rentsl income the same as 2 houses. Also wouldnt it be easier if u want to do a cash out refi for just 1 house as ooposed to 2?THANK YOU for ur time

  • Fernan Salazar

    This doesn't help at all, you're just explaining the idea of refinancing which everyone the is already looking for these kind of videos have. why not say how much time to refinance, or how the process works, or does it matter how many properties in you llc portfolio, etc…

  • Ernest Anderson

    Hi Clayton, I found your book on Amazon before I discovered you on YouTube! You produce great content for all levels of investors. I have one question. Would you refi your main resident to get 50,000 to buy your first rental and do Fund & Grow or would you do a HELOC and only have access to 15,000 and rely on finding more investors? I'm leaning more towards doing the total refi requiring less investors unless you see a benefit in taking less money in using the HELOC. Thank you for your valuable time.

  • Vladislav Zima

    Hey Morris, I have a 3.5% interest mortgage on my primary residence and I am trying to refinance (OR do a HELOC on) to take available equity money out fast for the purpose of creating a down-payment towards my next investment property? My equity is over $100K in my primary home. Would it be smarter to do a refinance and get new 30yr mortgage or create a HELOC and have 2nd mortgage for equity amount in this case?? Thanks.

  • Metal Bum

    How do you generally do this Morris? For a mixed use 11 unit property worth about $2 mill.
    Should I just get rents up then apply to lenders. What other things should I do to property prior to refinancing it.

  • Sumeet Bais

    I'm here just for the comments and reactions.. got an investment property 9 on 10 times you'd get 75% LTV. What about the closing cost and the risk factor before using the cash out amount for a down payment for another property? Interest rates of 4% on a cash out – investment property is not available even in today's market (unless you buy down points) where rates are Soo low already. On papers this may work but in reality, life happens.. there's no shortcut to wealth building..just my opinion.

  • Nic Hill

    I rinse and repeat also. But nobody seams to mention that you need stellar credit to pull a heloc to make the numbers work when renting it out. This is extremely difficult to do if you live in California also.

  • Mohammed Elalami

    Thank you but I have a question about applying for a HELOC which is free of any closing cost to use for the next property instead of Rifi.? Please educate me about this point.

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