What are your thoughts on refinancing to leverage unused equity?

4 Replies

What are your thoughts on refinancing to leverage unused equity? I would like to leverage my equity to purchase another rental property, as well should I used a direct lender to refinance?

If numbers work and you can increase cash flow it may be a good idea to utilize equity to acquire additional property.

@VanNess Vaughn I'll give the super helpful answer of it depends... 

What are your goals? Do you want to get to x number of doors so you can retire or are you looking to park some excess cash in an asset you can control? 

What's the level of leverage? There is a big difference between 50% leveraged and 95% leveraged. 

How much other capital do you have? If you lose your job tomorrow and you cant rent your property for two years what will you do?

If pulling equity out is the answer, I'd go for a refi so you could maybe keep some of the terms you have in place.

Originally posted by @VanNess Vaughn :

What are your thoughts on refinancing to leverage unused equity? I would like to leverage my equity to purchase another rental property, as well should I used a direct lender to refinance?

 Many people think debt is bad.  Personally, I think if you have equity in rental properties, you're leaving money on the table if you can make the numbers work given today's historically low interest rates.  Having said that,  I wouldn't leverage my primary residence to speculate on some rental properties although many do.

It depends on the terms.  Many "direct lenders" have overlays that give you extra hoops to jump through and using a broker can work if their lender paid compensation is low enough; so it just depends.