Should I Refinance or sell? Here is my situation..

Question

I am in a predicament of what to do about my rental property. I would love to hear your thoughts.

Here is the current situation:Current Loan Balance: $204kMaturity Date: 2036Loan Interest: 5.125% - Changes each year based on Libor rateCurrent Payment:$2193 - including escrowCurrent Rent : $2300Current Cash flow: ~107

Needless to say, cash flow is my biggest issue.

Here are my options I can think of:

Refinance for 30 years mortgageRate:4.78%APR:4.819Payment: ~1700 including  escrowClosing Cost to be approx: $8000

or

Finance for 20 yearsRate:4.875APR: 4.9Payment: ~1900Closing Cost to be approx: $8000

or sell

Market price: $300k

Take the balance and invest in multifamily

My last tenant moved out 2 months ago and now the house is in the market for rent. I painted the house and fixed many other minor issues to make the house looks great. The roof was newly installed 1 year ago and the kitchen was renovated a year ago as well.

Let me know your thoughts? Am I missing any other viable option?

Evan Rodriguez · Answer

@Imran Raz

I’m having this same issues! Trying to come up with an exit strategy

Imran Raz · Answer

Thanks, @sara. I was also thinking about investing in multifamily thru cadre or similar funds.

Sara S Jung · Answer

@Imran Raz there’s a number of variables involved and depends on your long term goals, but I would ask where is your money going to get the highest returns? Depending on the appreciation rate and market your in, will you be able to get maximum returns for holding it another 3,4,5 years or more? If I have 100k, can I can put that into a Multifamily and potentially double my money in 5 years and reinvest again. Multifamily will have higher returns due to leveraging economies is scale and less cost per unit. If the market is favorable for selling in your market, I would sell and take the money and reinvest.