First time post.
I purchased my property in 09/2008 - 275K. For personal reasons had to move out, and started renting 02/2012, it's now 3 yr 10 months in rental with 4 month vacancy during this period.
- 1. Rent/month - 1850
- 2. Current principal - 190K
- 3. Interest rate 3% - 5/1 arm ending in 6 months
- 4. Annual Property taxes - 3K
- 5. Other annual expenses - (insurance, hoa etc) - 1.5K
- 6. During this rental period paid 6K for agents to procure tenant.
Current market value 290K.
As my 5/1 ARM term is ending in 6 months, I started to look for refinance options, i checked interest rates, now it's considered investment property so rates are higher, about 4% for 15yr fixed.
Can I get some help, this property, should I refinance and keep renting or sell it, how much I'll get if I sell and pay off mortgage, what's options I have.
The big question is what are your goals? It sounds like you would exit with about 80k, how would you invest that? and would that get you closer to your goals than keeping the property?
Best of luck
@Raj Kumar , I have to agree with @Lance Wakefield . What is your exit strategy? You do have one, right? Did you originally intend to cash flow this property or were you looking for capital gains? Do you want to keep your cash flow? Has your property valuation change up or down? What happens to your numbers when your current loan adjusts.
So, why are you looking to refi or sell? Do you need the capital or are you just avoiding the adjusted loan terms? If you need the capital for continued investing, you could sell, but you'll have capital gains tax and transactions costs that will take a significant bite. However, if your property will appraise high enough to create equity, you could refi and avoid the taxes and transaction costs while conserving much of your cash flow.
If you don't need the working capital right now, refi for a low fixed rate and enjoy the cash flow. If you're truly well capitalized, you might consider adding cash to your refi to lower your LTV and getting a better interest rate. I can't recommend this as it lowers your ROI and increases your exposure, but it might be right for you. Every investor is different. At least you know the option is out there.
So, bottom line, what should you do? You should weigh the options and make your own decision. Do not let anyone decide for you. If I can help you consider the options, feel free to contact me.
Thanks for the responses.
@Tom Mole, My goal is to have a long term steady income, but given I have about 80K equity locked in, i want to see if I'm making good returns on this, given my income/expenses, what other factors i should consider to calculate returns on this investment.
How does higher refi interest rate affect my returns and is it a good return on equity I have? House prices have been low for past several years, it took a while to reach current market value so is it good to take gains and find another property or look for other investment options or refifance at current interest rates and keep renting.
I do not have need for capital right now, on the other hand, i have pooled about 50K for next investment, right now my focus is long term steady income with good returns.