Selling Investment Property to Pay Down Primary Mortgage

[Samantha Springs]

BP! Would love some thoughts and opinions from the community. Here's the sitch:

I purchased a duplex in LA in 2020 with a sub-3% interest rate. I moved out of it and now operate it as a rental (one unit LTR, the other MTR). It cash flows a bit, nothing life changing.

I bought a second duplex in LA this year that I am currently house hacking (live in one unit, the other is LTR). I did a temporary rate buy down assuming rates would go down much quicker than they are, so the interest rate goes up to 6.1% next year (2025) and again to 7.1% in 2026. The mortgage payment is already high and my life circumstances have changed, making the payment even more of a stretch (not impossible, but definitely above the recommended percentage of take home pay).

I am considering selling the first property next year (which has about $200K in equity) to do a mortgage recast on the primary and get my payment to something more reasonable. I am hesitant because the first property is located where all the Olympics and World Cup activity will be in the coming years and the interest rate is so fantastic. But I also sometimes think owning only 1 property in LA would be less stressful and a more reasonable mortgage payment would improve my quality of life. I am not looking to build a real estate empire, just a few doors, and will probably only purchase out of state in the future.

What would you do? Are there other ways to reduce my mortgage that I am not aware of (besides refinancing)? What other factors should I be considering? Thanks for reading and any feedback.
 

[Bonnie Low]

Be very careful about assuming you'll be able to do a mortgage recast. Not all lenders will do this. My son is in this same position with his properties. His lender, the nationwide company Mr. Cooper, absolutely will not allow him to recast his mortgage even though he has over $100k in equity in a property where his note is less than $250k. People talk about it like it's standard and easy to do but you do not want to find out after you've sold the other property that it isn't possible so just proceed with caution.