I have a house with approx. $100,000 in equity and rental income that's covering the mortgage payment + management fee. The mortgage is at a fixed 5.375%, fully paid in 10yrs.
I've been thinking about refinancing to get cash out in the hopes that I can make more aggressive returns with the money, instead of having it buried in a very slowly appreciating house. Based on loans I've investigated, I can only get about 40-45K in cash out and keep monthly payments low enough to remain covered by the tenant (buying points + closing costs will suck 4-6K out of the equity, too).
This would be an easier decision if I could get the same interest rate without buying points of course!
2007-10-29 22:29:22 · 4 answers · asked by Geekman 2 in Business & Finance ➔ Renting & Real Estate
I suppose for better advice I should disclose my general situation, too: I'm young, have a relatively stable job, 6mos expenses saved, and max out my 401K. I'm thinking that now's the best time to invest in higher risk/yield instruments.
2007-10-29 22:31:58 · update #1
Location? Equity based on a current appraisal? Interest rate for the refi? Refi to me would be a waste of 4-6 K. In the end only you can decide. What about your Roth IRA?
2007-10-29 22:53:32 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Since you are already in good shape financially (congratulations on doing all of the hard work to set yourself up like that), I would recommend you either keep the rental and let it pay for itself over the next 10 years or take some of the equity and buy a second rental property that is cash flow positive. Then you are accelerating your rental income!
good luck!
2007-10-30 08:33:29 · answer #2 · answered by Rush is a band 7 · 0⤊ 0⤋
Leave it. That's what we're doing with our rental property . . . leaving good enough alone . . . We liquidated our stock accounts about three months ago and sold off any property with a mortgage about 18 months ago . . . You've waited too long to sell . . . Look at your refi fees it's about 12% of the cash received . . . what will you be investing in that will make more than 12%? You'd have to invest in something that returned 20% to make it worth your while . . .
2007-10-30 05:59:33 · answer #3 · answered by CHARITY G 7 · 0⤊ 0⤋
Buy low and sell high... Great advice with investments. With that said, why sell when properties are off some from their past values? You have a property which covers it's costs, and has a great loan. Hold it a few years and sell it when the RE market firms up some, then invest the money in those other projects you are thinking of.
2007-10-30 08:16:50 · answer #4 · answered by Jon S 1 · 0⤊ 0⤋