Cash out refinance opinions

2 Replies

Hey everyone,

I'm hoping to get some feedback about this. I'm considering doing a cash out refinance on one of my rental properties. I'm looking at taking 30k out and changing it from a 30 year into a 15 year. The PITI would be $1380. My current PITI is $840. Rent is $1700. Over the course of the refinanced loan, the total amount paid would be about $188k. Over the course of my current loan, the total amount paid would be $302k.

It seems to make sense to do a cash out refi because I'm long term paying less money for a larger loan. I get cash now rather than waiting a couple of years for a 30k profit. Obviously the risk is that the new numbers figure for me to break even when I factor in maintenance, vacancy, capex. It currently cash flows a few hundred a month. Also, I don't have a crystal ball and I can't say for certain what rents will do in the next 15 years. To mitigate that risk, my other rental property I get $1400 rent with the PITI at $704. I figure between the two properties, I shouldn't have to use money from my regular job to pay for expenses because the cash flow on the second property is large.

I’m just looking for some opinions about this. I think it makes more sense to me to pay less over the course of a loan and get cash now. But it certainly comes with risk. 

I’d appreciate any input. Thanks!

Hey @Gayle Melnick  Would you ever consider doing a portfolio refinance on your two properties to access more cash to expand? Just a thought.

These decisions are based on what you are trying to achieve specifically. I once refinanced a rental property for twice what I paid for it. Rates were actually higher when I did this also. For me it was an amazing move as I used that capital to purchase another deal with a very high ROI and cash flow. It depends on your strategy.

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