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Should I Sell My 4% Interest Rate Rental Property? ($300K in Equity!)

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Manage episode 454926768 series 83575
Content provided by BiggerPockets. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by BiggerPockets or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://player.fm/legal.

Should you keep, refinance, or sell your rental property? If you’re sitting on a low mortgage rate and plenty of equity, you’ve probably asked yourself this once or twice within the past year. Most people who bought a rental property before 2020 have seen unprecedented appreciation and rock-bottom interest rates and are likely sitting on a war chest-sized home equity position. But that equity could be better spent investing in new properties than keeping your old ones.

This is Dave’s exact predicament. He’s got a property he bought back in 2016 that has over $300,000 in home equity. It’s cash flowing a solid $500 per month with a mortgage rate of just under four percent, but only producing a measly two percent cash-on-cash return. He’s getting four times the return on his recent investment property purchases, so should he sell? Not so fast; we’re doing the math to figure out whether he should keep, refinance, sell, or change strategies on this property.

Got the same good problem? Stick around as we even drop a fifth option most investors overlook entirely, which gives you the best of both worlds.

In This Episode We Cover:

Whether to keep, refinance, or sell a low-performing rental property

The obvious problem with cash-out refinancing in 2024/2025

Why we DON’T love doing 1031 exchanges (and a tax-advantaged way around them)

Converting your long-term rental into a medium or short-term rental (MORE cash flow!)

How to access home equity WITHOUT refinancing your property or getting a new loan

And So Much More!

Links from the Show

Join BiggerPockets for FREE

Let Us Know What You Thought of the Show!

Ask Your Question on the BiggerPockets Forums

Grab Dave’s Latest Book, “Start with Strategy”

Get a Quote on Your Next Short-Term Rental Loan with Host Financial

Find Investor-Friendly Lenders

Keep or Sell? What to Do When Your Rental Doesn’t Cash Flow

Connect with Henry

Connect with Dave

(00:00) Intro

(01:20) Property Details

(04:51) 1. Keep the Property

(07:12) 2. Refinance the Property

(10:29) 3. Sell the Property

(17:12) 4. Convert Into a Mid-Term Rental?

(21:10) The Best Option?

(22:24) 5. Use Home Equity Instead

Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1055

Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email advertise@biggerpockets.com.

Learn more about your ad choices. Visit megaphone.fm/adchoices

  continue reading

1280 episodes

Artwork
iconShare
 
Manage episode 454926768 series 83575
Content provided by BiggerPockets. All podcast content including episodes, graphics, and podcast descriptions are uploaded and provided directly by BiggerPockets or their podcast platform partner. If you believe someone is using your copyrighted work without your permission, you can follow the process outlined here https://player.fm/legal.

Should you keep, refinance, or sell your rental property? If you’re sitting on a low mortgage rate and plenty of equity, you’ve probably asked yourself this once or twice within the past year. Most people who bought a rental property before 2020 have seen unprecedented appreciation and rock-bottom interest rates and are likely sitting on a war chest-sized home equity position. But that equity could be better spent investing in new properties than keeping your old ones.

This is Dave’s exact predicament. He’s got a property he bought back in 2016 that has over $300,000 in home equity. It’s cash flowing a solid $500 per month with a mortgage rate of just under four percent, but only producing a measly two percent cash-on-cash return. He’s getting four times the return on his recent investment property purchases, so should he sell? Not so fast; we’re doing the math to figure out whether he should keep, refinance, sell, or change strategies on this property.

Got the same good problem? Stick around as we even drop a fifth option most investors overlook entirely, which gives you the best of both worlds.

In This Episode We Cover:

Whether to keep, refinance, or sell a low-performing rental property

The obvious problem with cash-out refinancing in 2024/2025

Why we DON’T love doing 1031 exchanges (and a tax-advantaged way around them)

Converting your long-term rental into a medium or short-term rental (MORE cash flow!)

How to access home equity WITHOUT refinancing your property or getting a new loan

And So Much More!

Links from the Show

Join BiggerPockets for FREE

Let Us Know What You Thought of the Show!

Ask Your Question on the BiggerPockets Forums

Grab Dave’s Latest Book, “Start with Strategy”

Get a Quote on Your Next Short-Term Rental Loan with Host Financial

Find Investor-Friendly Lenders

Keep or Sell? What to Do When Your Rental Doesn’t Cash Flow

Connect with Henry

Connect with Dave

(00:00) Intro

(01:20) Property Details

(04:51) 1. Keep the Property

(07:12) 2. Refinance the Property

(10:29) 3. Sell the Property

(17:12) 4. Convert Into a Mid-Term Rental?

(21:10) The Best Option?

(22:24) 5. Use Home Equity Instead

Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1055

Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email advertise@biggerpockets.com.

Learn more about your ad choices. Visit megaphone.fm/adchoices

  continue reading

1280 episodes

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