Hello! I am new to investing and I currently have one SFR that cashflows about $350/mo and has substantial equity (around $100,000). I am trying to figure out how to fund my next investment purchase, but when I run the numbers for calculating a refi to pull out even just $40,000 of my equity, my cash flow seems to entirely disappear. I feel like I am missing something here... how can I have so much equity and not be able to access it when this is supposedly *the* method? The lender I talked to quoted me 4.5% for 25 years for an investment property.

Thanks in advance for any insight or info!

Megan

Hey @Megan Collins , yep I've run into this problem before.  This happens when homes appreciate faster than rent does.  When this happens to me, I end up selling the property and moving to something larger.  That might not be what you want to hear but it would solve your problems.  

Thank you, that makes all the sense in the world because the equity is definitely from appreciation and not from substantial rehab, and on top of that, I think my rent is a little on the low side. Thank you so much for taking the time to answer my question!! 

@Megan Collins 2 really important items here:

• You should only be considering loans that have a 30 year term.  I mean, you can do whatever you want I guess but a 30 year term will allow you to cash flow better.  
• There's also a lot of unknowns that cannot tell here - what type of a property is this?  What type of a loan can you qualify for?  What is the fair market rent for this property?  Would it be better to sell this property to buy 2 other properties that would cash flow better?  And other things too....so there might be OTHER things that are limiting your cash flow that we cannot see.  

Certainly willing to talk anything through here if  you would like to post on it or you can PM us and there's lots of people who are willing to help point you in the right directly.  Assuming the property is good and that you can qualify - 30 year, fixed rate loan will help.

Hi @Andrew Postell, thank you so much for your response!! I guess I incorrectly assumed that investment loans wouldn't be offered at 30 year, fixed rate... The property is a SFR in a good neighborhood and in excellent condition. If I could qualify for a 30 year mortgage at a low enough rate, that would definitely help the cash flow! I have also thought about selling it to fund other properties, but I would prefer to refinance. I will PM you for more details. Thank you so much!