As title says, I am building an ADU right now. Once complete I’ll prob net between the two houses 3k. I am debating doing a refi to take 4-500k or just keep the cash flow. I am leaning towards the refi. The money would just go into the market, I don’t have any plans to redeploy it. I maybe would pay down my primary 5.5% mortgage. The rates in the refi I’m getting quoted are 6.5%
Rental Income or Cash Out Refi
byu/ForsakenGround2994 inrealestateinvesting
Posted by ForsakenGround2994
3 Comments
Don’t pay down 5.5% with 6.5%.
The minimum equity I would leave in is enough to breakeven on monthly net income and reserve replenish rate.
Beyond that, would you take out 6.5% with your brokerage to buy stocks today? If no, leave it alone.
If it’s not your primary residence dump all of it and forget vanilla landlording.
Stock market twice as good.
Real Estate great for projects but a joke as a 12 month lease investment model.
I agree with the comment about the mortgage rates. Paying down a 5.5% loan by taking on new debt at 6.5% doesn’t really make sense.
Personally, I’d probably keep the cash flow as-is for now. You’re already in a strong position with the ADU adding income, and locking in higher leverage just to move money around feels unnecessary unless you have a really compelling use for the cash.
You can always revisit the refi later if rates improve or a better opportunity comes along. Out of curiosity, what would your monthly cash flow look like after the refi compared to where you’d be today?