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How Refinancing a Multifamily Property Can Multiply Your Investment

Lan Bell Lan Bell , 7/9/2018
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When it comes to investing in a multifamily property, there are many choices for any potential property owner to choose from. Some of these include duplex, triplex, quadplex, townhouse, an apartment complex. Multifamily properties have a high initial investment though they are easier to finance and have a good return on your investment. This quick ROI will allow you to put profits back into your property and allow you to have more potential tenants. For any real estate investor looking to purchase a multifamily property, there are four main different financing types that can help any beginner; Conventional mortgage, government-backed loan, portfolio loan, short-multifamily financing. Refinancing these loans will help you take advantage of current interest rates to help improve cash flow.

Which Form of Refinance

There are a variety of refinancing opportunities that are available to any property owner. Rate and Term Refinance, this is the most common form of refinancing. This form of refinancing is good for any property owner looking to reevaluate their loan and take advantage of new market values. Short-Term Refinance is when your mortgage lender agrees to pay off the rest of your loan in return for a new one at a lower cost, though these are rare because they are usually used to help people avoid foreclosure. Before we talk about cash-out refinance, first we must discuss equity and mortgages. When you start paying off your mortgage, you start to build equity. Equity is the amount of money you spend paying off your loan. For example, if you have a $30,000 loan and you only owe $20,000, you have an equity of $10,000.  When it comes to cash out refinancing you can take out the money you gave in equity and that money yours to invest with.  However, you will usually need a equity of about 20% before your property becomes eligible. Be careful as you still have to pay off the money you withdrew from your equity including interest. If done right, cash refinancing can be a useful way to invest money back into you multifamily property.

Improve Cash Flow

Refinancing can be a useful way to get out of a bad interest rate especially if that interested is not static and could change over time. Refinancing your multifamily property can be a financial risk, make sure you calculate how much money you will save each month and the total cost of refinancing your mortgage. You can increase your cash flow which can be used to invest back into your property, if done correctly you can save anywhere from .5 - 2%. These reduced rates can be used to invest back into your property increasing its value over time. If you want to multiply your investments reducing your monthly mortgage rate is key.

Track the Market

If you are trying to increase your investment into a property by using refinancing, then you are going to need to know how the market operates. Tracking interest rates to see if they are high or low is a must, as a good credit score is not enough to lower your rates, especially if interest rates are at an all-time high. Using online calculators and statistical data is an important tool to learn, especially to tracking market values. Remember, just because you can get a lower rate does not mean you will save money, which is why optimizing your skill set and leaning industry standards are the key multiply your investment.


Refinancing may be overwhelming though as a property owner it is an essential part of saving money and investing back into your property. Increasing your multifamily property value by remodeling and maintenance work will not only make tenets happy, it will benefit when/if you decide to sell. This is where refinancing ties everything together, tracking the market and finding the right refinance option to fit your needs will increase your cash flow. Furthermore, refinancing is a great way to build credit, but it can also destroy it if you are not careful. Refinancing can be a useful tool that can multiply your investment into a property as long as you use it correctly.