Is It Time to Refinance Your Investment Property Before Fall?

August is a good time to check in on your investment properties and see what is working and what may need to change. Maybe you finished a renovation this summer. Maybe a rental is doing better than expected. Or maybe you are already thinking about another property before the year ends.

One thing worth reviewing is your current financing. The loan that worked when you bought the property may not be the best fit anymore. Refinancing could give you a chance to replace that loan with one that better matches where you are now.

That does not mean every investor should refinance. The decision should come down to your numbers, your property, and what you want to do next.

Here are three simple things to think about before fall.

Start With the Reason You Want to Refinance

Before looking at new loan options, ask yourself why you want to refinance in the first place.

Maybe your current loan was meant to be short term. Maybe you have completed repairs and the property is in a different place than it was when you bought it. You may also be thinking about using the value in the property to help with another investment.

Having a clear reason makes the decision easier. It gives you something specific to compare against the cost and terms of a new loan.

Take a look at what you owe now, how long you plan to keep the property, and what you want your next step to be. If the current loan still works well for your plan, there may be no reason to change it. If it no longer fits, refinancing may be worth a closer look.

Boston Trust Corp works with real estate investors who may need different financing as their properties and plans change. If you are not sure what makes sense, schedule a conversation and review your options before making a decision.

Look at the Property and the Numbers Again

Your property may look very different today than it did when you first bought it.

You may have completed renovations, added tenants, fixed major issues, or paid down some of the loan. Those changes are worth reviewing before you decide what to do next.

Start with the basics. What do you currently owe? How much have you put into the property? What income is the property bringing in? Are there any major repairs or expenses still coming?

You should also think about the cost of refinancing. A new loan can come with closing costs and other expenses, so it is important to look at the full picture instead of focusing only on getting new financing.

If you are considering a cash-out refinance, think about how you would use those funds. Maybe the money would help with another property, a renovation, or another investment goal.

Whatever the reason, make sure the new loan still fits your larger plan.

This is a good time to contact a lender and talk through the numbers. A simple conversation can help you understand what options may fit the property and what questions you still need to answer.

Think About What You Want to Do Next

Refinancing should fit into what you want to do with the property and your portfolio next.

Are you planning to keep the property as a rental? Are you hoping to buy another investment property? Do you have another renovation or construction project coming up? Or do you simply want financing that makes more sense for the property today?

Your answer can change what type of financing may work best.

An investor holding a rental for several years may have different needs than someone preparing for another purchase. The same is true for someone who just completed a renovation compared with someone who still has work left to do.

August is a good point to look at the rest of the year. Review your goals, your current properties, and any projects you may want to start before winter. Then decide whether your current financing supports those plans.

If you are thinking about refinancing an investment property, now can be a good time to ask questions and understand your choices. Contact Boston Trust Corp. to schedule an appointment and talk through your current loan, the property, and what you want to do next. A simple review now can help you decide whether refinancing makes sense before you move forward.