Going to Refinance, but should I pay off my rental property?

[Aaron Rocha]

I own a rental property in Denver that is producing 12-13% Cap rate. I owe $165k on the property and I am in the process of refinancing my primary home to pay off the rental property. My initial reason for doing this is that I will save over $700 in interest per month. Sounds like a no brainer, but am I missing something?

My primary home value is $700k. I currently owe $335k and my new loan paying off my rental will be $500k. Payments go up on my primary $450 a month, but I’m still saving over $700 a month overall.

1)Refinance and pay off my rental?

2)Refinance cash out and buy another investment property?

3) Refinance pay off my rental, snowball my primary, and use some cash reserves to buy another investment property?

I really appreciate your thoughts and perspectives and thank you in advance.

[Chris Seveney]

I agree with @Joe Villeneuve. Refinance and take out a HELOC on your primary. If your rental is cash flowing keep it as is. When another good deals comes along, snatch it up with cash offer from HELOC then refinance into a conventional.

Rinse and Repeat. 

This also depends on your age and tolerance for rentals. I would not pay off a rental with my primary.

Also think of if things ever go south for you. You have a primary residence with higher payment and an investment property (that maybe you could not sell). If you keep it as is, your primary home payment stays lower and you could negotiate potentially on the investment and lower risk of losing primary home