Refinancing a rental property comes with several compelling benefits for landlords and real estate investors. At the top of the list is the potential to unlock some excellent wealth-building opportunities through improved loan terms, lower monthly payments, and additional cash flow.
Although this opportunity comes with an inherent degree of risk, it’s still worth reviewing. Yet, only a handful of new investors know that this strategy exists—even fewer know about hard money refinancing. Let’s take a look at refinancing for a rental portfolio.
When to Refinance Your Rental Property
Refinancing rental property should ideally be done when property values are high, and interest rates are low. Many real estate investors opt for refinancing to:
- Get a lower mortgage rate
- Buy a new investment property
- Pay off debts more quickly
- Enhance an existing investment property
Right now, the economy is highly in favor of refinancers and borrowers. As the economy strengthens, this balance will likely result in higher interest rates. As such, it’s better to refinance your rental portfolio sooner rather than later.
Why Refinance Your Rental Property?
There are some great benefits that may come with refinancing your investment property, such as:
- Moving from a variable to a fixed interest rate.
Variable interest rates can keep costs down in the short run, but they can also spiral out of control in the future. By getting a fixed interest rate, you can control the costs and get a more favorable outcome for your loan.
- Switch to a lower interest rate or lower monthly obligations.
Refinancing can also get you lower interest rates, which ultimately translates to lower debt over the entire life of the loan. You may need a short-term bridge loan to meet the financial requirements of the lower interest loan.
- Changes in the length of the loan commitment.
If your mortgage is fixed as 30 years and you want to make payments more predictable, you may be able to switch to a shorter loan term. Although you’re making larger payments, it does mean that you have a shorter loan commitment and are free to invest in other properties in the near future.
- Renovate and improve existing properties.
Renovating a home can add tremendous value to a rental property. By refinancing with hard money loans, real estate investors can attract new tenants that are willing to pay a higher rent for the upgraded place.
How to Get Hard Money Refinancing
Hard money loans are a popular form of short-term financing in real estate. Unlike traditional bank loans, these loans do away with the creditworthiness of the borrower and instead focus on valuable collateral.
Hard money refinancing is designed to be quick and short. It gives you quick access to loans and can allow you some time to get your finances in order.
Get hassle-free refinance loans in Houston. Allura Financial offers hard money refinancing solutions for real estate investors and landlords.
Get quick approval and excellent terms for single-family homes, multi-family buildings, and long-term rentals when you work with our team of financing experts. Learn more about our attractive loan programs or call (833) 896-6639 for more information.