I'd like opinions on two scenarios I am planning for. I have one rental property that I bought a year ago. Solid cash flow and going great. I calculate that I could refinance/increase equity and improve my cash flow by $430/month. This would involve using $40k cash for the increasing equity part. Option 2 is leaving that house as is and using the cash to invest in another home. I am projecting $200/mo cash flow if I bought another home currently. We self manage the current home and would the second. Seems like the answer would be take the less cash flow on an additional property because of appreciation (long term holds). But want to see if there's any perspectives I'm not seeing. Thanks
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
11mo
James,
Mortgage rates are dropping and it might be a good idea to do a cash out refinance and build the ARV/Equity. Then buy another one using the additional funds towards down payment.
Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 850 votes
10mo
Hi @James Miedema, nice to meet you here on BP! A practical approach is to weigh whether the extra $200/month cash flow and appreciation potential outweigh the added workload and risk, and make sure the numbers still work if unexpected expenses come up. You might also consider how each option affects your long-term strategy, does refinancing the first property give you more flexibility to buy additional properties later, or does acquiring a second property now better position you for future appreciation?