If you own a successful investment property, you may be sitting around quite a bit. But you can also be sitting on an untapped gold mine. By refinancing, you have the potential to increase your wealth or increase your cash flow.
Refinancing an investment property is a lot like refinancing your own home: When you tap into your equity, you can look at a variety of financing options. A popular option for investment property owners is to use the funds to purchase another property. But there are quite a few alternatives that underscore how property can bring prosperity.
1. Expand your empire. Leveraging a current investment property to purchase rentals and other real estate investments is a favorite tactic among land tycoons. If you haven’t touched your home equity in years, the time may be right for you to do so now. The recent housing slump has led to an increase in renters. This could be an ideal time to get that cash refinance and add it to your property portfolio.
2. Raise the rent. Another favorite landlord tactic is to take money from a cash refinance and upgrade current rental units. A new bathroom here, or a new kitchen there, can instantly improve a property’s market value and allow for higher rents.
The key is to be pragmatic in your remodeling efforts. Choose inexpensive fixtures with good aesthetic appeal. A tenant will focus on the appearance of their property, and anything that looks good, even relatively inexpensive, can add substantial value. Newer carpeting and nicer light fixtures pay dividends in the long run.
3. Take advantage of your investment. There is no written rule that says that the money you have earned on your property should be reinvested in more properties. There are many important things that require funds, such as your child’s college education or a large capital investment in the stock market. You can even use the loan to consolidate debt or take a vacation. There are several ways to grow your money tree; just make sure you do your homework before you plant seeds for that tree.
4. Say “go” to more cash flow. If you’re simply looking to increase your cash flow, a rate and term refinance of your current investment property could free up money on a monthly basis. Look up the current mortgage rate for your property. Despite interest rate hikes in recent years, overall mortgage rates remain excellent. You may be ready to save some big bucks on your monthly payments.
Refinancing a mortgage is a smart way to use short-term debt to build long-term wealth. Check the current mortgage rates in the market and carefully analyze your situation. It may be the right time for you to expand your investment with the help of a mortgage refinance.
