Should I refi my portfolio?
I am 26 years old and am looking to refinance my self storage portfolio. The current loan balance I have is approximately $1.92 million. I am looking to borrow an additional $300,000 for expansion projects. All of the properties have been purchased within the last 5 years. Using my local bank, the terms of the existing loans are 20 yr term with an interest rate that resets every 5 years. Currently, my rates range from 4.75%-5.75%.
I have enlisted a mortgage broker and the best rates and terms I can find are as follows:
25 year amm, 5.75%-6%, 10 year fixed
20 year amm, 5.08%, 10 year fixed
What I am seeking advice on is whether I should refinance the entire portfolio or not. It appears interest rates will continue to rise, and as it stands with my current financing situation, I have 3 more interest rate resets I will be subject to over the next 15 years.
If I refinance, the closing costs are expensive, but it will let me consolidate and make me subject to only 1 or 2 interest rate resets over the next 20-25 years (depending on the amortization schedule). This is appealing because it gives me greater control over my monthly payment and I can pull equity for construction.
Alternatively, if I refinance, I'll be paying more interest over a longer period of time and I am essentially starting over again with my payments. Another option is to not refinance, and I could get a loan for my expansion projects with minimal closing costs and no fuss, but I will again have another 20 year loan subject to 4 interest rate resets.
My ultimate goal is to have to pay off the portfolio. I plan to hang onto it for the long term. Any thoughts or suggestions are greatly appreciated.
Thanks!