Top Four Reasons to Refinance Investment Property

If you own a successful investment property, you may be sitting pretty. But you also may be sitting on an untapped gold mine. By refinancing, you have the potential to either build your wealth, or boost your cash flow.

Refinancing an investment property is a lot like refinancing your own home: When you tap your equity, you can pursue a variety of financial options. A popular choice for investment property owners is to use the funds to buy another property. But there are quite a few alternatives that underscore how property can create prosperity.

1. Expand your empire. Leveraging a current investment property to acquire rentals and other property investments is a favorite tactic among land barons. If you haven’t touched your property’s equity in years, the time may be right for you to do so now. The recent housing slump has led to a rise in renters. This could be an ideal time to get that cash-out refinance and add to your property portfolio.

2. Raise the rent. Another favorite tactic of property owners is to take money from a cash-out refinance and upgrade current rental units. A new bathroom here, or a new kitchen there, can instantly improve the market value for a property, and allow for higher rents.

The key is to be pragmatic in your remodeling efforts. Choose economical fixtures with good aesthetic appeal. A renter will be focused on the appearance of your property, and anything that looks good, even if it’s relatively inexpensive, can add substantial value. New carpets and nicer light fixtures pay dividends in the long run.

3. Cash-in on your investment. There’s no written rule saying that the money you’ve made on your property needs to be reinvested in more property. There are plenty of important things that are calling for you funds, such as your child’s college education, or a great equity investment in the stock market. You can even use the loan to consolidate debt or take a vacation. There are a number of ways to make your money tree grow; just be sure to do your homework before you plant seeds for that tree.

4. Say “go” to more cash flow. If you’re simply looking to boost your cash flow, a rate and term refinance of your current investment property could free up money on a monthly basis. Look up the rate on the current mortgage of your property. Despite the interest rate climbs of the past few years, overall mortgage rates are still excellent. You may be ready to shave some serious dollars off your monthly payments.

A mortgage refinance is a smart way to use short-term debt to increase long-term wealth. Check current mortgage rates on the market and carefully analyze your situation. The time may be right for you to build on your investment with the help of a mortgage refinance.