Rehabilitation and real estate investing

Whether mortgage refinancing is good or bad, using poor dad’s terminology to borrow rich dad’s depends on how well you know how to use debt. Debt allows you to hold onto more property than you could on your own, when properly leveraged with the right cash reserves built to withstand the months when you can’t find tenants for your property. Real estate moguls like Donald Trump have taken advantage and so should you.

This article highlights three good things to consider if you have paid off your first property and partially paid off your second property and are looking to refinance your real estate investment to buy a third property. Reasons why you should do this.

Reason number 1 – monthly cash flow

I know some people who are very content with just a fully paid off property, but there is a problem, the wealthy are the poor. This means they don’t have cash flow but have a lot of money locked up in real estate holdings. By refinancing your loan from your second property, you can take some money out of it and put that money into a third property and increase your monthly cash flow.

Reason #2 – Low interest rates

Spend some time watching interbank interest rates and the Federal Reserve interest rate to see which way it’s going, and aim to refinance in years when interest rates are low. This allows you to spend less money and save more money overall. Now with low interest rates, take and save more cash flow and then use it to invest in other real estate, as above.

Reason #3 – Combine properties

To get your real estate investments into the next gear, then refinance both of your properties and take the money and buy a third property. Note that you should have savings built into your calculations as described above to protect against a market downturn in rentals or the inability to find tenants. After your assets multiply manifold, you may want to follow the advice of gurus and then combine the total value of all your assets and then buy a big commercial building.

In conclusion, refinancing frees up much-needed cash that you can use to purchase other real estate to generate more monthly cash flow. Take the big step today and spend time writing your investment strategy down on paper and implementing it, and you’ll start to see your real estate investment portfolio soar.

By Joel Teo 2006 All rights reserved.

Leave a Reply

%d bloggers like this: