...and you'd be behind. Do the math. ALL the math. If you take $50k out of your pocket and spend it on you're current property to pay off the mortgage (you know, the mortgage you're tenant is currently paying off for you), and you add $500/month ($6k/year, how many months (years) would it take before you recovered your $50k in cash...that you didn't need to spend in the first place?
Keep in mind, you are not making a profit until you have recovered all of the cash you spent...which includes the unnecessary payoff of the property.
Buy a new property.
Yeah save for the next property.
What market did you buy in?
@Vincent Plant I may be wrong, but i think there may be a disconnect with your use of the word Cash Flow. Cash Flow means your net income each month after accounting for all expenses, not just your mortgage payment. That means setting aside some for maintenance (because eventually you will need to fix something), vacancy, etc. So saying you currently have cash flow of $650 means that's what goes into your wallet after all those expenses and mortgage payment, taxes, insurance, etc. This may well be true, BUT then you say that without a mortgage payment your cash flow would jump to $1150 - meaning that's what you'd take home after all those other expenses...ergo your $75k prop is renting for more than $1150, likely more like $1500...
If the prop is $75k and you're getting more than $750 in rent then I'd just hold onto that bad boy for all its worth because that rent to value ratio is fantastic, more than 1% is increasingly hard to come by. Continue to let your tenants pay off your loan (as @Joe Villeneuve said) and save for the next one. So, if you're currently netting $650 per month after all expenses etc then congrats on a great investment property!
BUT, if that's actually just your Gross Rent minus your Mortgage Payment, then redo the math with the other expenses added in and see where you land. It might be that this property isn't really a profitable investment and you should look at selling, rather than refi, since it looks like we're nearing the top of this market cycle and you don't want to be stuck with a depreciating property that just barely cash flows, you capital can work harder for you elsewhere.
Again, if your cash flow as stated is accurate, then congrats! If that's actually gross minus mortgage, take another look and then reassess your options.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you