My wife and I just refinanced both of our rentals on which we had a 3.50% 30 year fixed mortgage rate. Why? Each loan was COSTING us money! How? Over the last 5 years both properties had doubled in value and we had a ton of equity in them. So, we refinanced at 4.50% and pulled $70k in equity out of both properties. Our monthly payments have increased by about $500 because of these 2 refinances.
Now we will buy more rentals with great cash flow most likely in Kansas City, Detroit, or Atlanta. If we buy in Kansas City or Detroit we may be able to buy 6 homes with this money as our down payment on each loan and we should cash flow a minimum of $400 a month on each property. That’s an extra $1900 a month in cash flow for us I am estimating to pay for college and then later retirement.
In Monopoly terms we just turned our 2 houses into hotels. Our previous mortgages saved us money, but now we will make MORE MONEY. This is the difference between saving and INVESTING.