Should I refinance or sell?

4 Replies

I'm looking for some advice...I purchased a 2 unit building 3years ago I live in one unit and renting out the other which pays almost all the mortgage. I'm ready for my next investment but also ready to move into a house (not wanting to house hack anymore). My multiunit is worth about 250k now of which I owe 143k with a 4.25% interest rate. I been getting offers to refinance at 2.75% so should I refinance or sell to purchase a bigger unit and a house? I'm at a stand still and don't know what to do HELP! 

@Jasmine W. You should be able to get that kind of rate on your home purchase as well. If you sell you have to be able to replace the rental and buy the house with the equity. If you can do that than it it might be worth it.

@Jasmine W.

Hey Jasmine,

You need to take into account that you will get taxed on the one rental unit from the sale. The unit you lived in should be exempt from capital gains tax. It does sound like you know what you want as far as moving and stop house hacking. Another option could be to refinance with the lower rate all while taking some money out for a deposit on a SFH for yourself or if you already have money for the deposit keep a decent reserve from the cash taken out. This would allow you to keep your duplex and increase your cashflow presuming it would cashflow with both units rented all while getting you out of house hacking. Either way I wish you the best of luck. Merry Christmas.

You make no mention about the cash flow...the most important number here.

As far as the choices you mention generating a lump sum of cash, here are you numbers:
A - Sell - You have over 40% in cash (equity) tied up that could be accessed if sold.  What could you do with over $100k as far as new Real Estate?
B - Refi - You will only be able to refi around 70% (at best) of your PV, which would get you only $75k...menus closing costs.

The real question here, is can you get a better net CF with the cash from a sale, or by keeping your current property and buying an additional property using the smaller lump sum from a refi.

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