Refinance? Or just keep it the way it is?

[Richard Hadley]

Ok, so I currently have 2 separate properties that only have a balance of $18000. Each but they value at roughly $160000. Each

What I was thinking of doing was to get a 20 year mortgage from a different lender for $80000. To mortgage "refinance " just one of them. Out of that $80000. I would pay off both mortgages and also a $40000. Heloc on my personal property which I used as a down payment on an entirely separate property.

My current payments on these 3 loans are $395. For the first $18000, loan @ 4.5 intrest

$395.for the second $18000. Loan @ 4.5 intrest

And $689. On the Heloc $40000. Loan @ 8.75 intrest

Total monthly payment on all 3 is $1479.

My thoughts are even with these high interest rates, I would be better off borrowing some of the equity I have in just one property and get my other 2 notes freed up and my monthly payments would only be $680. Per month on a single $80000. Loan.

Am I missing something or does this sound like a good plan moving forward

[Jason Wray]

Richard,

You have a good amount of equity in both properties and if you plan on buying more REI. I would not focus on the rates right now because they will come down in the next 12-24 months. While property values will continue to increase you will be waiting for rates to come down but values will move upwards.

The lower rates will not help if the property values continue to rise which it looks like they will continue to do in majority of states.  I would tell you to do a cash out refinance use the cash to buy more rental properties and wait to refinance for the lower rate in 12-24 months.  You might have a little less cash flow but your increasing your inventory, doors and passive income.  Play the long game and you will be happy in the end.

As you buy more properties the equity will build so at some point you will be able to pull out cash and either pay down certain loans or continue to increase your doors. Being cash fluid allows you to buy properties that need TLC so you can renovate and get out more cash on the ARV. That allows you to repay the previous loan and use whats left over to continue to buy more REI.