I would first talk to your tax adviser, then call a loan officer to see if you can qualify for a new loan on your personal residence. Use the funds to purchase another rental with cash, under $200,000 with high rental income.
Note: I have lived and worked in Folsom since 1986, we might be neighbors !
Nancy K. Fard
It looks like I'm the only one who handles mortgage and real estate so far. That's a personal decision and I wouldn't make that decision until you talked to your tax advisor. If you have any questions about rates (under 5%) or payments, don't hesitate to call me (496-2556) or email me at firstname.lastname@example.org.
Have you considered refinancing a second on your rental so that you still have positive cash flow and investing in one or two more income properties right now with the proceeds of the refinance, thereby increasing your monthly income even more, not to mention the possibility of future appreciation. It's a great time for doing just that if your tax adviser gives you the okay.
Why would you want to get rid of the great leverage you have on your current rental property? This is a really good bad problem.
Good luck--I hope this helps.
Keller Williams Realty
Your interest on your personal residence is tax deductible but only up to a point. What many fail to realize is that depending on your income, that amount may be reduced. I believe that on rental property, you can write off the whole amount. But that is only one consideration in your decision.
I think the first question is to make sure your assessment on property values is correct. With the adjustment in the markets, you may not have as much equity in the homes as you expect. I would be willing, if you don't have a realtor you are currently working with, to give you a property valuation. Second, understanding the cost of the loan and whether it's worth the refinance costs for what you're trying to do.
You may be better off considering accelerating the loan payments on one of the properties, rather than removing one of the loans. But again, that's a question for the CPA first, then a lender.
Good question here, as it shows an advanced way of thinking about your finances, J & A.