Recast vs Pay-down Economics

[Account Closed]

I recently sold a rental property and would like to invest the cash into another rental property that I currently own.  I'm treating this investment essentially like a bond (safe, simi-low return, etc). 

From what I can tell the economics on making a large lump sum pay-down on my current loan all to principal (thus shortening my loan life and greatly reducing the interest paid) ; and the economics of recasting the loan are the same... the recast seems to increase the life of the loan even though you put your lump sum to principal, however, your investment property's cash flow month to month is higher. 

• So does the interest savings + increased cash flow of a recast equal the larger interest reduction afforded by the normal pay-down? 
• Has anyone used this strategy to increase their cash-flow and make a humble return on reducing interest over the life of a loan? 

Cheers,

JK

[Chris Mason]

ROI will be equal to the interest rate in either case.

It's just a question of if you want more cashflow today, or if you want it to be debt free sooner tomorrow.