With mortgage rates still at near record lows, many experts are predicting that they will remain at these levels throughout the remainder of 2021 and beyond. So, with the opportunity to borrow being in the neighborhood of 3%, does it make sense to refinance your investment property(ies), or to instead hang on to loans with rates that may be twice that high – or more?
While refinancing rental property could provide a number of advantages, such as a lower monthly payment – and in turn, a higher net cash flow on occupied units – there are some important factors to consider before you move forward.
One item is whether or not you will obtain the lowest interest rate possible. For example, even with seemingly miniscule rates being offered by banks and other lenders, there are factors that could cause the interest to go up, such as delinquencies on your credit report.
In addition, with the continued extension of the COVID-19 related rent moratorium in the U.S., the amount of rent that is being brought in should also be a factor in whether or not to refinance.
Refinancing will typically make more sense if you plan to hold on to the property at least until the breakeven point – which refers to the time at which your savings outweigh the cost of obtaining the new loan.
If you own rental property in Central Florida and you decide to keep it, bringing a property management team on board could allow you to continue generating income from it, but without all the headaches of managing tenants and maintaining the day-to-day operations of your investments.