Cash-Out Refinance Breaks the 1% Rule?

[Rhyse J.]

Hi everyone,

I'm assessing my options to scale my portfolio from my current two doors.  Right now, my properties are conforming pretty well to the 2% rule, but I'm weighing the option of refinancing the properties to leverage the decent amount of equity I have in them.  However, refinancing these would bring my rent-to-debt ratio to just under 1% if I were to take out the full 80% of the property value in a refi loan.

How have others in this situation weighed this choice?  What other factors need to be considered?  Does the answer to this depend at all on the markets in which I'm investing (I'm looking in the Chicago area)?  What would others recommend?

Thank you for sharing your perspectives!