Refinancing as a Scaling Strategy — Smart or Overleveraging?

[Tracy Thielman]

Property managers,
I’ve noticed more landlords pulling cash-out refis to reinvest in additional properties or improve existing ones.

Do you see refinancing as a momentum builder for scaling, or does it add too much risk to long-term stability?

Would love to hear how you (or your clients) balance growth with risk when it comes to refis.

[Drea Na]

Hi Tracy,

A cash out refi can make sense depending on the circumstances. I'm surprised you're seeing a lot of those at the moment - in my area, interest rates haven't come down enough for the refi to make sense. 

Nevertheless, with the right circumstances it is absolutely a vehicle one could use to scale without too much risk - for example if a property was a rental and paid off but had a lot of equity, it could make sense to do the refi.

Ultimately every situation is different, but it is definitely a strategy that works for scaling. David Greene writes about this in his book BRRRR.