Is a cash out refi worth it if the interest rate increases 1%

[Mark Aqua]

Hi everyone
I’m looking to do a cash out refi on my rental property so I can purchase another property. 
I am able to pull 45k out of the property but my interest rate is going to jump 1%. I’ll be losing $350 in cash flow due to the increased mortgage payments. 
Do you think this is too steep a price or worth it to keep momentum going?

Thanks for any thoughts you have!

[Andrew Postell]

@Mark Aqua what's your alternative here?  Meaning, if you don't take cash out...how would you be able to afford another property?

Right now property value is significantly outpacing rent.  But rents will increase over the next several years.  So you may not cash flow so much this year, but 3, 4, 5 years from now you will be much better.

And that other property that you will use that cash for - more cashflow!  Add that on top.

But if you have a better alternative...then that's what we should do.  Most of us do take cash out of our properties to buy more properties because there is no "plan b" that's better.  Doing a cash out loan is tax free money.  You are still borrowing BELOW the current rate of inflation - lots of reasons to do that.

It's just like if you were a business owner - hiring a new employee is an expense.  But that employee should allow your company to make more money.  What you are facing here is what all business owners face.  And whatever you decide is right for you.  No wrong answers here.

Hope all of this helps.  Thanks!