We have a rental property on a 15 yr mortgage with only 5 yrs left. Should we refi and take money out to buy another property or pay off the mortgage as soon as possible. Our mortgage is $1800 pm, it rents for $2500 pm. We are in our 40's, live in CA and have 4 rental properties. I'm torn between piece of mind having a house paid off, and the tax advantages of continuing a mortgage and buying another property while the market is at a low.
Should we refi and buy another property?
- Thread starter Julesflex
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WestLake
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What is the situation with your other rentals?
The other rentals are all on 30 yr fixed rate mortgage. 2 have a positive cash flow with rate of 4.75% and 5%, 1 breaks even with a rate of 5.75%. We wanted to refi the 1 that breaks even for a positive cash flow, but due to having 5 properties we are unable to refi unless we have 30% equity in the house. In the current market, we probably have 20% equity on all 3 of these rentals.
We had thought about that scenario. We also thought about selling it as even with putting money into it, the other rentals in a different area are doing much better, which is where I'm thinking of buying another property. It just kills me to sell when the market is down.
LandlordInvestor
Dryer sheet wannabe
Jules,
I am a landlord myself. The answer to your question depends. If you are actively acquiring properties and your goal is to go from 4 to 12, then you should refi, pull out money, and buy more.
However, if you are planning to get these paid off as soon as possible and live on the rental income as essentially a pension, then I agree with paying them off early. Of course, I would start with the 5.75% mortgage first.
The wife and I have found it difficult to stop buying properties. We are getting close to the most we can self- manage, so now we are where you are at and starting to pay them off aggressively.
For those that have what it takes to be a landlord, I think rentals are a great strategy to help you early retire.
Good Luck.
I am a landlord myself. The answer to your question depends. If you are actively acquiring properties and your goal is to go from 4 to 12, then you should refi, pull out money, and buy more.
However, if you are planning to get these paid off as soon as possible and live on the rental income as essentially a pension, then I agree with paying them off early. Of course, I would start with the 5.75% mortgage first.
The wife and I have found it difficult to stop buying properties. We are getting close to the most we can self- manage, so now we are where you are at and starting to pay them off aggressively.
For those that have what it takes to be a landlord, I think rentals are a great strategy to help you early retire.
Good Luck.
msbearkeley
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Do you have the option to do a cash-out refi on your primary? We were able to refi our primary to pay-off two rentals and got to a point where we only had 2 mortgages (primary and one rental)....money for primary is just so much cheaper.
Our exit strategy of selling all rentals for a profit didn't work out given the market, so our plan B was to work and pay all rentals off. However, with the market the way it is, we gave in and bought a short sale 3 months ago (turned/rented it in less than 30 days!) and now waiting to hear on another short sale....maybe we're nuts, but with our last purchase, we're actually in a much better shape financially! Good luck!
Our exit strategy of selling all rentals for a profit didn't work out given the market, so our plan B was to work and pay all rentals off. However, with the market the way it is, we gave in and bought a short sale 3 months ago (turned/rented it in less than 30 days!) and now waiting to hear on another short sale....maybe we're nuts, but with our last purchase, we're actually in a much better shape financially! Good luck!
