Refinance Rental Property - Dont Sell It

You own a rental property for years, and never see the "big pay-off." Is it time to cash in on your investment, now that you've paid down the mortgage, and values are up? Maybe not.

The Problem With Selling

Selling means you'll have to pay a large capital gains tax. This can be avoided if you reinvest through a 1031 exchange, but then the point is that you want your money, right? Also, a good rental gets more income as rents go up. Do you want to lose this inflation-indexed retirement plan? What's the alternative?

Refinancing Rental Property

Have you considered that if you refinance, you can get much of your gain out of the property, without paying a penny in taxes? Borrowing money is not a taxable event. You can take it and spend it however you want, and still keep your rentals.

Let's look at an example. Suppose you have owned a small apartment building for years. You bought it for $240,000, with a downpayment of $40,000, and mortgage payments of $1650 monthly on the balance. Now it is worth $400,000, you only owe $120,000, and your cash flow is around $800/month. How do you get at that equity?

A bank will probably loan you 70% of the value, or $280,000. After paying off the first mortgage, you are left with $160,000. With todays lower interest rates, your payment on the new mortgage will be about the same. At most you might lose $50/month in cash flow.

An even better scenario: Use $40,000 for high-return upgrades to the property, such as carports or laundry rooms, and then raise the rents. You could have $120,000 left over to spend any way you want, AND have higher cash flow. Does that sound better than selling your retirement plan? Don't sell. Refinance that rental property!

Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

MORE RESOURCES:

Fidelity sheds portion of real estate investment group - Bizjournals.com

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/0-0fd=Rurl=http://www.bizjournals.com/boston/stories/2008/10/13/story30.htmlcid=1257256510ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNF9pdsL8nK9G35NgWgT934aUU6CGQFidelity sheds portion of breal estate/b investment group/abrfont size=-1font color=#6f6f6fBizjournals.com,nbsp;NCnbsp;-/font nobr54 minutes ago/nobr/fontbrfont size=-1Pyramis Global Advisors, a division of Fidelity Investments, is spinning out the private equity arm of its breal estate/b group. A Fidelity spokesman declined b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/0-1fd=Rurl=http://www.msnbc.msn.com/id/27158239/cid=1257256510ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNF7tVP2luo0R2FQ00u5SCZdnKKRUgDepartment of Justice developer not able to get financing/a font size=-1 color=#6f6f6fnobrMSNBC/nobr/font/fontbrfont class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1257256510hl=ennobrall 323 news articles/nobr/a/font/div/font/td/tr/table

Falcon Announces Best-in-Class Green Real Estate Project - MarketWatch

Grand Rapids hosting UM real estate forum; showing off development - WZZM

The Short Sale Formula Launched to Help Real Estate Investors ... - PR Web (press release)

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/3i-0fd=Rurl=http://www.prweb.com/releases/outsourceshortsales/shortsaleformula/prweb1431994.htmcid=1257188797ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNEFqpGNEuvzd7pj56uUweIlN6OwdAimg src=http://news.google.com/news?imgefp=E5fG3VEd68MJimgurl=www.prweb.com/prfiles/2008/10/06/219405/gI_SSFHeader.PNG.jpg width=80 height=32 alt= border=1brfont size=-2PR Web (press release)/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/3-0fd=Rurl=http://www.prweb.com/releases/outsourceshortsales/shortsaleformula/prweb1431994.htmcid=1257188797ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNEFqpGNEuvzd7pj56uUweIlN6OwdAThe Short Sale Formula Launched to Help bReal Estate/b Investors b.../b/abrfont size=-1font color=#6f6f6fPR Web (press release),nbsp;WAnbsp;-/font nobr6 hours ago/nobr/fontbrfont size=-1The Short Sale Formula will be released to the breal estate/b investing community to provide a step-by-stop formula on how to put together a short sale packet, b.../b/font/div/font/td/tr/table

Bahrain real-estate market ‘faces record year’, says expert ... - Al-Bawaba

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/4i-0fd=Rurl=http://www.albawaba.com/en/countries/Bahrain/236688cid=1257187494ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNEiksV1jA-jGXGD8q9wuPgSxERJLAimg src=http://news.google.com/news?imgefp=WaNMUcjqdl4Jimgurl=manager.albawaba.com/img/new_sys/mediabank/47631_mb_file_41a53.jpg width=80 height=54 alt= border=1brfont size=-2Al-Bawaba/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/4-0fd=Rurl=http://www.albawaba.com/en/countries/Bahrain/236688cid=1257187494ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNEiksV1jA-jGXGD8q9wuPgSxERJLABahrain breal-estate/b market ‘faces record year’, says expert b.../b/abrfont size=-1font color=#6f6f6fAl-Bawaba,nbsp;Jordannbsp;-/font nobr4 hours ago/nobr/fontbrfont size=-1DTZ the expert breal estate/b advisory firm today released a market report on Bahrain giving a detailed examination of the state of the Kingdom’s breal estate/b b.../b/font/div/font/td/tr/table

Real estate bust: Toledo wins at Big House - San Francisco Chronicle

Now Is The Time To Invest In Commercial Real Estate - PR Web (press release)

Real Estate Investors meet Tuesday - Prescott Daily Courier

Great Food, Good Drinks and Luxury Real Estate on Main Street - Eastside Business Journal

Hypo Real Estate#39;s Viermetz Steps Down After Bailout (Update1) - Bloomberg

table border=0 width= valign=top cellpadding=2 cellspacing=7trtd width=80 align=center valign=topfont style=font-size:85%;font-family:arial,sans-serifa href=http://news.google.com/news/url?sa=Tct=us/9i-0fd=Rurl=http://visitbulgaria.info/german-memorial-man-who-tried-kill-hitler-1939cid=1256598407ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNFvVpBO1OHeeHJf7wBRo5XgZ1X6gwimg src=http://news.google.com/news?imgefp=UQiwgZh78g4Jimgurl=visitbulgaria.info/files/germany50.jpg width=80 height=80 alt= border=1brfont size=-2Visit Bulgaria/font/a/font/tdtd valign=top class=jfont style=font-size:85%;font-family:arial,sans-serifbrdiv style=padding-top:0.8em;img alt= height=1 width=1/divdiv class=lha href=http://news.google.com/news/url?sa=Tct=us/9-0fd=Rurl=http://www.bloomberg.com/apps/news%3Fpid%3D20601100%26sid%3DaqkEy1ZoxSwY%26refer%3Dgermanycid=1256598407ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNF4fV-T6OuR1lAWEWrfymqD_1QxywHypo bReal Estate#39;s/b Viermetz Steps Down After Bailout (Update1)/abrfont size=-1font color=#6f6f6fBloombergnbsp;-/font nobrOct 10, 2008/nobr/fontbrfont size=-1By Nandini Sukumar and Oliver Suess Oct. 10 (Bloomberg) -- Kurt Viermetz quit as supervisory board chairman of Hypo bReal Estate/b Holding AG, five days after b.../b/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/9-1fd=Rurl=http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSL813731320081008cid=1256598407ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNGP4GsTdrYogPEF3N0L4X3AOZMBcQUPDATE 1-Hypo bReal Estate/b gets access to credit line/a font size=-1 color=#6f6f6fnobrReuters/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/9-2fd=Rurl=http://news.xinhuanet.com/english/2008-10/08/content_10162155.htmcid=1256598407ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNH3cwbIQIiAPQIUSx7_JctCxEJ1qQHypo bReal Estate/b changes its CEO/a font size=-1 color=#6f6f6fnobrXinhua/nobr/font/fontbrfont size=-1a href=http://news.google.com/news/url?sa=Tct=us/9-3fd=Rurl=http://www.monstersandcritics.com/news/business/news/article_1436206.php/Hypo_Real_Estate_chairman_resigns_after_bail-out_cid=1256598407ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNEHZP58edEW56Yp0JB6pLJZzItL4wHypo bReal Estate/b chairman resigns after bail-out/a font size=-1 color=#6f6f6fnobrMonsters and Critics.com/nobr/font/fontbrfont size=-1 class=pa href=http://news.google.com/news/url?sa=Tct=us/9-4fd=Rurl=http://www.iht.com/articles/ap/2008/10/07/business/EU-Germany-Hypo-Real-Estate.phpcid=1256598407ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNFdlq79jntLrQCn0Xojein1LdkTCgnobrInternational Herald Tribune/nobr/anbsp;- a href=http://news.google.com/news/url?sa=Tct=us/9-5fd=Rurl=http://www.bloomberg.com/apps/news%3Fpid%3D20601087%26sid%3DawNS2jf5LLJA%26refer%3Dhomecid=1256598407ei=H0jzSKawD5DmyAScj7WKAQusg=AFQjCNHs6O7Zpoq021fuqubkVaqqhAdPMAnobrBloomberg/nobr/a/fontbr/font class=p size=-1a class=p href=http://news.google.com/news?sourceid=navclientie=ISO-8859-1rls=GGLG,GGLG:2005-22,GGLG:enncl=1256598407hl=ennobrall 97 news articles/nobr/a/font/div/font/td/tr/table

Real-Estate - Google News

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