Rental property being refinanced by its owner

Should You Refinance Your Investment Property?

If your portfolio has one or more of the 48.5 million rental units in the United States, the record low-interest rates might have you wondering if it’s time to refinance or sell.

It can get frustrating when your investment properties seem never to have the big pay-off you thought they would. Your current renters have paid down the mortgage, and the value has significantly increased. Why shouldn’t you sell?

Keep reading to discover why it’s advantageous to refinance an investment property rather than selling it outright.

Not the Payout You’d Expect

There’s an endless list of why people decide to sell their investment properties. But when you compare them all, they have one common factor – the payout.

You’re looking for a large sum of cash, but you’ll likely create a taxable event when you sell your investment property. Of course, the 1031 exchange rule is there to defer any capital gains tax, but that goes against the whole point.

You also lose out on increased rent over the years. So that leaves you with the option to refinance, and you couldn’t ask for a better time.

When you refinance a rental property, you may be able to receive a significant portion of what you get if you sell. Unlike selling a home, refinancing doesn’t create a taxable event. This means you have the freedom to do whatever you want with the check you receive.

Pay Yourself When You Refinance Your Investment Property

Even though mortgage rates have hit a decades record low, the slight fluctuations have caused some people to worry. However, it’s forecasted to be a gradual rise and not the rocket ship that some expect.

That said, locking in reduced rates before they go any higher is beneficial because of the lower monthly payments you would make. The increased rent with reduced monthly payments works in your favor to get the most out of your monthly income.

Even if you don’t have a single rental property, it doesn’t mean there are no advantages if you refinance a second home. Whether you’re looking to retire or want to lessen your financial burdens, it’s possible to switch to a fixed-rate loan that could significantly reduce the loan term.

This means you’ll have the freedom to pay off the property in fifteen years or less!

If you have your eyes set on a property that you want to invest in but lack the cash, investors can take equity out of their current portfolio with cash-out refinancing. This way, you have the money available to put as a downpayment for the additional investment.

Cashing out doesn’t mean that you have to put the money into another property. You can always renovate your current investments and increase their value with the money you receive.

Refinance to Build Wealth

Creating real wealth is no longer reserved for the ultra-wealthy. The days of selling your investment properties to generate a significant influx of cash are long gone. When you take advantage of the options available, you can create a source of income that’ll support your lifestyle for years to come.

If you want to refinance investment property but don’t know where to start, contact one of our specialists to help choose the best option that makes the most sense for you.


When refinancing an existing loan, total finance charges may be higher over the life of the loan.

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