Leveraging paid off properties

[Gilles D.]

Hello BP Fam!

I currently have 3 rental properties, all SFH. In total I'm looking at about 2M USD in equity.

The properties do not have a mortgage on them. 

I am an international investor therefore I do not qualify for the standard mortgage like a US investor would.

Currently I would qualify for a cash out refi at 65% LTV and the rates are in the high 9s….

I am close to hitting my monthly cash flow goals but I want to keep expanding my portfolio of course.

Since the cash flow goals are almost hit, I do not mind acquiring some debt to continue to grow.

However, at such rates it does not seem very favorable. I wouldn’t mind if it’s a break even operation just to acquire another property but even that seems quite hard to find with these rates. I understand that it still means I would have an extra property, more tax benefits, another unit that appreciates in value. So even if I had to add a couple of hundred dollars a month on top of the rent to cover the mortgage, it would still be a win of course… But preferably at least break even. I thought about slowly transitioning into MFH but I might wait until my net cashflow has exceeded 10K/month and if I can at least come out once/twice a year to the US to follow up. 

I bring up the MFH because maybe at first with a 12 unit I’d have to add money to cover the mortgage, but after forcing appreciation and raising rents it could actually make sense. But the high 9s really don’t seem very appealing right now.

Aside from a cash out refi, are there other ways that I can leverage all of this equity to acquire more properties?

I appreciate any input from you all ! 

Thanks guys,

Gilles

[Anthony McEvoy]

Hello @Gilles D.

However, at such rates it does not seem very favorable. - This is a limiting belief.  Analyze the property to figure out what monthly payment at today's rates you would accept.  Then, back into the purchase price.  Often times when rates go up, purchase price goes down and vice versa.  This is because most buyers are focused on the monthly payment.

Look at the situation even more long term... you can acquire a property at a lower purchase price and higher rate.  Then, the rates drop in a couple of years.  Turnaround and refinance at the lower rate at whatever principle is left on the mortgage.  Obviously, there is no guarantee of the future rates in either direction.