Refinance vs Hold — How Do You Decide?

Question

When rents rise and equity grows, how do you decide when refinancing makes sense versus holding as-is?

James Jones · Answer

I don’t refinance just because equity exists. Equity sitting there isn’t doing anything by itself.

I refinance when three things line up:

The deal still cash flows after the refi

If pulling cash out drops the property below my minimum cash flow threshold, I don’t touch it. Appreciation doesn’t pay the bills. Cash flow does.

The refi capital has a higher job to do elsewhere

I ask a simple question: If I leave this equity parked here, what am I giving up? If I can redeploy that capital into another deal that produces more income or de-risks the portfolio, refi starts to make sense.

The debt improves or stays neutral

Lower rate, longer term, or fixed debt that stabilizes the asset. I’m not trading stability for leverage just to feel productive.

If none of those are true, I hold. Quietly. Boringly. And let rents continue to rise.

Most investors get in trouble refinancing emotionally. They see equity and feel like they’re “behind” if they don’t tap it. That’s how solid rentals turn into over-leveraged stress projects.

Refinance is a tool, not a milestone. Use it only when it clearly improves the portfolio, not just the spreadsheet.

Ryan Muska · Answer

I'm holding off from cashing out until I know I want something else and that the return of holding both properties is going to be greater than the new mortgage I am taking out. I am investing in a cash-flow area though.

In appreciation markets, it's a little tougher since you may not cash flow. But today's payments may be gains tomorrow.

Adam Bartomeo · Answer

Due to inflation, time value of money, opportunity costs, and the like I have recently adopted a philosophy of today's money is better than tomorrow's money. So, refinancing sooner is better than later. I do wait for at least a 1% point drop in rates if I have a mortgage. The reason that I have adopted this is because the investments that I purchase have a much higher return than the potential negative cash flow and thus cover any negativity and still put money in my pocket.

Andrew May · Answer

@Tracy Thielman-What's the purpose of the refinance, add more cashflow via additional purchase, fix n flip, value add?

What's your strategy with this capital? Can this new venture out-earn the debt payments, monetary debasement and inflation?

Where are we in the interest rate cycle?

Get your dealflow in full swing. Then run the numbers on 30-40 deals minimum.

Run a portfolio risk analysis with the extra borrowing.

Then, isolate the specific property in question and ensure the current and future rents cover the refinance-so you know you have runway, and don't feel pressured because of cashflow restraints.

Refinance vs Hold — How Do You Decide?

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