Refinance a 17-year fixed rate loan

[Lorenz Cornelis]

Hi,

I bought my first two rental properties when I was 21 years old. Since I was still studying and did not have a fixed income at the time I had to negotiate a 17 year long loan & 2.85% fixed rate interest. Although it did not make sense for me at the time since a shorter time frame increases the monthly mortgage payment, the bank accepted the deal. 

Fast forward three years and soon leaving university for the real world, I am now considering refinancing the loan (17 --) 30 years) on both properties in order to buy a third and/or fourth property.  Both of my current properties currently cash-flow zero on the 17 year term so there is room to extract equity. Would it make sense to extract equity until the cash-flow is zero again after refinancing?

Numbers:

Price/property: 165k

Down payment made/property: 70k

Interest rate (fixed): 2,85%

Term: 17 years

Cash-flow/property: $0/month

I am looking for opinions & experiences of more experienced investors and potential risks i.e. overleveraging. Feel free to shoot me a message!

Thank you! 

[Soh Tanaka]

Since not all the numbers are present, I have to guess here, but it looks like if you refinance to 30-year fixed without taking any cash-out, your cash-flow will increase about $200. That's dangerously low for 2 properties, at least if I were you. I would at least sell one of them, and use the money to buy another one that cash-flow better.