Cash out Refi if I don’t need the money?

3 Replies

Hi all!

I’d purchased a townhome as an investment back in May for 150k (3.375%). I spent about 20K fixing it up, and got a tenant in paying 2.2k/mo. Property is current CF positive at just over 1K/mo.

I had thought about doing a cash out refi, and started up the process. Property came in appraised at 195k, and so I can pull out 32K at a 3.625 interest rate, but this pushed up my P&I from 494 to 666.

I’m waffling a bit here…initially I wanted to be opportunistic and take advantage of the environment etc. but I’m not sure I want to buy another property right now, and wondering if maybe it was a mistake to pursue the refi?

I also carry quite a bit of leverage across my two investment properties (280k) and my primary (230k - but might sell this within a year and get a nice gain)

Would welcome the community’s thoughts! Thank you!

Hey Jordan,

What are your goals? If it's to maximize the equity in your portfolio, then pulling cash out is a great way to increase your return on equity - just be cautious of going into negative cash flow territory. 

If you want cash flow for some income, then maybe leaving the mortgage as is would be best. 

Hope that helps!

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