Refinance with today’s interest rates

[Daniel Kelly]

Hi all!

I’ve never refinanced before (or utilized any creative financing strategies, although I’ve researched them at length). I bought my first rental property in 2020 at $290k. Since then, the market has boomed and I’ve been fortunate enough to now have this home valued at $380k on Zillow. I’m looking for ways to grow my portfolio and a cash out refi seems to make perfect sense.

My question is, however, I purchased this home during Covid with an incredible 3.2% interest rate. With interest rates now above 7%, it's made it almost impossible to find new opportunities that could even sniff the ROI I currently have. Does it make sense to refi such a great rate? I put down 20% originally so I'd essentially be getting all of my cash back out of the deal, which in turn makes my ROI infinite? Any advice / suggestions would be much appreciated !! Thank you!

[Jon K.]

You don't necessarily have to refinance to have access to the equity. If you look around you may be able to find a bank that will give you a HELOC in second position which would give you access to the equity when you need it (when you find deals to BRRRR). That's the main strategy I used to acquire most of my portfolio.

I don't know if they still do it but TD Bank used to do a HELOC on investment properties in second position provided they were titled in your personal name and not in an LLC.