How Do You Decide When to Refinance vs. Sell?

[Deborah Wodell]

Hey everyone, I’m curious about how you all decide when to refinance or sell a property you’ve held onto for a while. Do you go by interest rates, property appreciation, or maybe just a gut feeling when it’s time to cash out or reinvest?

I'd love to hear what metrics or signs guide your decision—whether it's ROI, cash flow, or cap rates. Do market conditions, taxes, or potential rental income play a big role for you? Would love to hear your experiences and what's worked best for you!

[Jon Martin]

I look at it as Return on Equity. If a property has a low return on equity, as in low revenue relative to value, it would make more sense to sell because you likely have equity that could be redeployed elsewhere for a better return. If you have a high return on equity, then you are more likely to be making high revenue relative to your existing payment, which means you would be more able to cover the higher payment of a cash out refi and would then have cash to deploy. 

This is a general rule and depends on a variety of factors but that would be the framework I would start with. For example, low ROE property could have more appreciation runway to go because it is in such a desirable area, so maybe you would want to hold onto it.