Retiring and debt free property
Discussing an event, where my rental property would be paid off and I would be receiving rent payments.
If I was to refinance my home and make the rent payments to the mortgage, would i be better off financially?
I could use the refinanced money and interest earned to replace the rent income each month but the deduction of the rent payment against the loan, would lower my taxes as I would have no income (income would come from the loan). Of course, the amount of interest would need to be less than the taxes I would get from rent alone if the building stayed debt free,
Am I thinking about this incorrectly?
Most Popular Reply
The simplest way to look at this is:
1. At what rate can you borrow money if you borrow against your rental?
2. What return can you achieve if you reinvest that money into something else?
If your borrowing at 8%, you should be aiming to make 12%+ on that money when you reinvest it.
It is definitely possible to achieve a 12%+ return on your money in this market. But I wouldn't say it's easy. You need to have some experience, be willing to work hard, be confident in your underwriting skills, and have a little bit of luck.