To Refi or NOT to Refi: That is the Question

[Michael Malmrose]

We own a property (on a 15-year loan) that is currently being rented

REFI:

• $500 cash flow, have 
• $100K to invest, 
• pay off student loan debt ($500 a month) five years early
• paid off in 30 years

Don't REFI: 

• paid off in 11 years
• $100ish cash flow for 11 more years
• $2,500ish (or more depending on rents at that time) cash flow after 11 years are up

I like the thought of having the cash flow when I'm in my early 60s, but without it, it'll take longer to build.

Thoughts?

[Jaysen Medhurst]

@Michael Malmrose, this isn't necessarily either-or. That being said, I'm leaning towards REFI. I know that 11-year time horizon looks attractive, but think about what you can do with an additional $100k over that 11 years. Plus, you'll have nearly $90k more cash flow in that time. Getting the student loans off your back will be a huge emotional relief. And money is emotional, don't let anyone tell you differently.

It's really better to have several (responsibly) leveraged properties making the same cash flow as 1 free-and-clear property. Beyond spreading risk, the leverage increases the other 3 avenues of REI profit (appreciation, depreciation, pay-down) exponentially.

Remember, you can always put it on a 30-year note, but pay it off faster, if you decide to do that later.