James Kinney CFP®,CCPS
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I purchased an apartment building for $4.35 million and invested $1.5 million in the down payment and working capital and obtained a $2.85 million loan. The building is now worth $6 million and I am doing a $1.2 million cash out refinance. The new loan on the existing building will be $4 million. After paying off the existing note and closing costs, I will have $1 million to invest in another apartment building.
What would be the return on my investment on each apartment building after the refinance? Would my return on building #1 be based on the $300 thousand investment I have remaining in the building? Would my return on building #2 be based on the $2 million I have invested or $1 million because the other million I invested was borrowed with the refi of building #1?
Frankly with this much money at stake, I would advise you hire a good accountant and allow him to answer these questions for you. As much as I find the advisors on this forum give great advice, I do not think I would rely on an online forum with accounting questions involving millions of dollars....more »