Hi all! Long time listener of Bigger Pockets and this question is HAUNTING me so I jumped on here. First time to post :)
I have a small portfolio in small town outside of Lubbock, Texas. When we first started investing, we were able to put some of those houses on 15 year notes at 4.5-4.75%. Our rents were covering expenses with an extra $100 or so after paying for everything. We bought properties in some of the nicest areas in town, focused on appreciation, and houses that just didn't need much from us because they are in excellent condition. The market went absolutely wild (like everywhere) and over the past few years our taxes more than doubled on some of our houses. For example, one house had taxes of about $3,000 per month and they are now right over $6000. On top of that, insurance has risen making our little bit of cash flow gone and we are now in the negative monthly. :(
I have been able to raise rents on a few properties to get everything covered, but a few of the houses would be at a price point that would be nearly impossible to rent out in our small town. It is just out of price range.
So, what can I do?! I've come up with a few different scenarios:
1. I lump three of my properties into a refi loan together. Two of those properties have 8 percent interest rate and one has a 5 percent interest rate. It would give that loan equity between the houses of approximately $125,000. I am hoping that I can put the three of them together at a rate of 6-6.5%. If I refinanced into a 30 year note, it would allow me to get the rental set on all three of these properties at a place I know they will rent and we will have cash flow of approximately $450-$500 per month together on the three.
I would keep one of my other properties on a note at 4.75% that we owe $113,000 on and we have been able to raise rents to cover everything. I would focus my extra money on getting this property paid off as fast as possible so I could start snowballing this property payment against the big three loan. (after pay off, and cover insurance and taxes, profit of $1100 per month).
Problems: We initially were trying to get properties paid off in 15 years or less so we would have profits every month in a short period of time. Refinancing seems like throwing that goal out the window.
2. I don't refinance. The three properties referenced above: a) one turns into a mid-term allowing me to get higher than normal rents that cover everything; b) one turns into a short term; c) the third I focus on getting the highest dollar with short fall of may $100 per month and planning to raise rents in the next few years to cover that eventually.
Problems: I have been a long time airbnb user. There are a few in my town and I am confident I can do a really good Airbnb, but even with all the research it scares me that I would not make enough on short term rental market to cover everything and make that extra money necessary. Airdna has my area of investment at 88% and occupancy rates above 50%. When I run a 50% occupancy at the average rates it covers what I need. --- but so many what ifs after investing quite a bit in furnishing the place.
HELP!!
