Rate Locked Investors

Investor · Nassau County, NY · Member since 2022 · 88 posts · 19 votes

I see alot of people who purchased around early 2020's who want to access cash from their investments but cant refinance without messing up their cashflow. Is anyone here running into similar issue?

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Caleb Brown

Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes

Many are. Not a ton of options to tap. I see 1031 exchanges more common.

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Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
4d
Many are. Not a ton of options to tap. I see 1031 exchanges more common.
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Andrew FreedBusiness Member
Investor · Worcester, MA · Member since 2020 · 1k+ posts · 1k+ votes
4d
@Tyler Mcclean - Good question! Investors always have the option of opening up a RELOC, rental line of credit or an equity loan to access the equity beyond the first position. I've done that on primary residence, investment properties, and commercial properties. Typically for owner occupants, you can get a HELOC or equity loan up to 100%. For investment property, they typically go as high as 75%. Solid tactic to tap unutilized equity to scale your portfolio while keeping good debt terms in place.
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Jose Ramirez
Investor · Beach park IL · Member since 2022 · 17 posts · 9 votes
3d
Yes I’m at in IL and trying to do a cash out of one of my rental and new loan payment is the same as the rental payment and I be not making no cash flow unless I increase the rent payment
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- Tyler MccleanPro Member
  OP
  Investor · Nassau County, NY · Member since 2022 · 88 posts · 19 votes
  3d
  Have you considered other options? Like taking a second as a line of credit? What are they doing for you on the rate?
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- Jose Ramirez
  Investor · Beach park IL · Member since 2022 · 17 posts · 9 votes
  3d
  Dscr loan 7.5 %
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- Tyler MccleanPro Member
  OP
  Investor · Nassau County, NY · Member since 2022 · 88 posts · 19 votes
  3d
  I just messaged you
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Divin KanyamaBusiness Member
Accountant · Seattle, WA · Member since 2025 · 188 posts · 59 votes
3d
@Tyler Mcclean , This is a common issue for investors who bought or refinanced when rates were historically low. The property may have substantial equity, but replacing a 3%–4% loan with today’s financing can reduce—or completely eliminate—the cash flow.
Before refinancing the entire property, I would compare alternatives such as a HELOC, second-position loan, partial sale, or borrowing against another asset. Each option has different costs and risks, so the key is determining whether the cash will produce a return that justifies the added debt. Sometimes protecting strong cash flow is more valuable than accessing equity simply because it is available.
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Matthew Tregoning
Real Estate Consultant · Melbourne, FL · Member since 2019 · 205 posts · 114 votes
3d
What would the cash be used for? That’s the part I’d want to know before getting too attached to a way of pulling it out. Having equity available and having a good reason to borrow against it are separate things.
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- Chris SeveneyBusiness Member
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  Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
  15h
  @Matthew Tregoning - great comment. I also see many using it for real estate investments, which honestly can be a very bad idea because you end up with 100% financing on that other property. This occurs when you take the 25% down payment from a line of credit that is currently at 7% to 8%, plus the financing from the lender. If something goes wrong with that property, interest and fees can accumulate very quickly and most likely you have a personal guarantee. I have seen people get wiped out completely, very quickly, if they fall behind.
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
3d
They might be stuck that way for a bit unless they gradually increase rent over time and don't pull the full cash out. They underwrote their deal with sub 5% rate and it will be pretty rare to see these rates again.
It might be a good reason why CA real estate is messed up. People with sub 5% rates are holding a bit tighter to keep the lower payment and in some instances it makes more sense to rent a home rather than to buy as long as you put the difference in an S&P.
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Igor Ganapolsky
Englewood, NJ · Member since 2018 · 464 posts · 88 votes
3d
tyler this is super common right now. i buy exclusively at tax deed auctions with cash so i don't have the rate lock problem myself, but i see a lot of investors in your exact situation down here in florida.

matthew asked the right question above - what's the cash for? because that's really the whole decision. if you've got a 3.5% loan and you refi at 7.5% to pull out equity, that cash needs to earn you more than 7.5% somewhere else just to break even on the swap. and that's a pretty high hurdle.

if the answer is "i just want to access my equity" with no specific deal in mind, honestly just leave it alone. paper equity doesn't pay bills but neither does a new loan payment that eats your cashflow. i'd rather have a property sitting there making $300/month with a 3.5% payment than refi it and break even or go negative just to have cash sitting in my account.

if the answer is "i've got a specific deal that returns 12%+" then maybe the math works. but be honest with yourself about whether that deal is actually lined up or if you're just feeling impatient.

the other option nobody's mentioning here is patience. rates do come down. we saw it happen in 2023-2024 when everyone thought rates were going to 10% forever. if you've got a good property with a good low rate and positive cashflow, you're already winning. you don't need to fix something that isn't broken just because you see equity sitting there.

my whole approach is basically the opposite of what you're dealing with - i buy distressed properties at auction for cash, fix them up, and either rent or sell. no loans, no rate risk, no refinancing headaches. the tradeoff is i need more cash upfront and i can't scale as fast as someone using leverage. but i sleep better at night knowing exactly what my numbers are without worrying about what the fed does next.

for your situation - if the property cashflows and the rate is good, just be patient. the equity isn't going anywhere and neither are the opportunities.
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Clay Edmonds
Member since 2026 · 18 posts · 8 votes
15h
Tyler, yes, and this is something we're seeing quite a bit.
A lot of investors who bought or refinanced in 2020-2022 have exactly the problem you're describing. They've built substantial equity, but they're sitting on a first mortgage with a rate they really don't want to give up.
Doing a traditional cash-out refinance can make very little sense if you're replacing the entire low-rate first mortgage just to access a portion of the equity.
The good news is that a cash-out refinance isn't necessarily the only option anymore.
There are now second-position products specifically designed for investment properties, including DSCR-qualified second mortgages and, depending on the state and program, investment-property HELOCs.
That's where I'd start.
Instead of disturbing the existing first mortgage, you leave it exactly where it is and access a portion of the equity through a second lien. With some of these programs, qualification can be based primarily on the rental property's cash flow rather than the investor's personal income.
Obviously, the numbers still have to work. The amount available is going to depend on the property's current value, existing first-mortgage balance, rent, combined loan-to-value, credit and the specific lender's guidelines.
But for somebody sitting on a 3% or 4% first mortgage with substantial equity, I would absolutely investigate a second-position strategy before replacing that first mortgage with today's financing.
If the objective is to access capital for another acquisition, renovations or some other investment purpose, preserving that low-rate first mortgage can be extremely valuable.
So yes, the problem you're describing is very real. Fortunately, the financing market has started developing products specifically to address it.
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Stuart UdisPro Member
Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
4h
I think this is more of an issue for owner occupied properties with longer loan terms. Many commercial real estate loans have shorter terms and balloon payments. As those loans come due, owners will be forced to make decisions about refinancing, selling, or investing more capital.

The issue goes beyond interest rates. Capital improvement costs have risen substantially. A property purchased a few years ago with newer systems may be difficult to acquire on the same terms today, particularly in lower priced markets that cannot as easily support those costs.
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Henry Lazerow
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
3h
I had a client use a program where they refinanced into a higher current market rate cash out but got an extra $50k in equity on a $500k refi. This happened because the bank invested the old low rate debt rather than paying it off while still removing his name from it. It's a new program for residential mortgages but has been common for years on large commercial deals. Other then that yes many are just holding onto their low rate high equity properties. I have a HELOC and so do many of my clients but the rate on them is so high that it does not make much sense to use for anything other than short-term withdrawals. Not the worst problem to have though, we are the lucky ones.
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