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
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Get a Quote on Your Next Short-Term Rental Loan with Host Financial
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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
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Should I Sell My 4% Interest Rate Rental Property? ($300K in Equity!) | BiggerPockets Real Estate Podcast - Listen or read transcript on Metacast
