Refinance or Am I Pre-Paying Cashflow?

[Patrick Young]

I am debating whether to refinance a rental property. The numbers might be obvious to others or it may be a matter of investing philosophy. I generally would not want to have to add equity to a property just to refinance. My rental  was purchased with 3% down as a primary about 6 years ago. It is a rental now and does not cash flow but is in a high appreciation area and A neighborhood so very worth it to keep. If I had put 25% down it probably cash flows or breaks even.

Here are the numbers

-Have about 20% equity and a 384K current loan balance

-Need to come up with 5% equity more

-Current PITI is $2,760

-Refinance at 4.375% with 25% equity would give me a PITI of $2,193

-Difference is $567 month less PITI

-The kicker, I would have to bring from 25-30K to the table to have enough equity. I am loathe to do this sacrificing purchasing another rental but, do the numbers make sense?

At $567 less a month, that is $6,804 a year which is between 22% and 27% depending how much I end up putting in.

On one hand I like that I am using the equity I built up, but do not like having to fork over that much extra cash. Am I simply Pre-paying for cash flow and fooling myself? It makes the rental much more attractive and I probably break even or make some. I am not looking for advice on whether this is a good cash flowing property (I know it is not). It is in an A neighborhood, yada yada yada.