Lived in this current rental for 2.5 years and recently rented it out. Tenant paid entire year upfront (his employer paid for it as a relo for him and wife) and we gave a $2000 annual savings (150/month) We plan on taking the $25,800 and investing it on next property which will be a duplex, triplex, or quad. Currently looking. Our current interest rate is 5.25% on the property and we have about $100,000 in equity presently in that home. Should we refi and do a cash out for the next few properties we plan on buying. We are currently paying $1442 on the mortgage including property taxes. We both work full-time still at our professions and can afford to continue paying for that mortgage. Given that the interest rates are in the 3% range presently, is it worth it to get lower interest rate and cash out? First timers here. Thanks for your advice.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
6y
I think it's worth considering selling this property, @Shari Layton-Ferreiro. I don't think a refi is worth it. It will take a long time for the (slightly) lower rate to break even after the new set of closing costs.
After accounting for vacancy, repairs, and CapEX (I assume you're self-managing), looks like you're only seeing ~2.5% Return on Equity (ROE). That's pretty slim. Unless this place is appreciating like crazy, it's probably a good idea to re-deploy the capital.
We bought this house in 2016 and lived in it for 2.5 years paying down the mortgage and now we're renting it out for 2150 a month. The tenant is paying all utilities. Were cash flowing 500+ a month. I'm not clear on what you're saying. Please reiterate. Sorry...newbie here!