Typically, a rental property will appreciate over time. As you pay down the mortgage the spread between the original mortgage value and the appreciated value of your property will increase. The difference is called net equity. Many investors look at the increasing net equity in their properties as a tool that can increase the size of their rental portfolios. How do you utilize your net equity if it exists only on paper?

There are multiple methods of utilizing your net equity to increase your purchase power. One is to cash out refinance your existing mortgage. Our clients prefer to use 30-year fixed mortgages that only factor in credit score and the DSCR of the property. We make underwriting these a breeze. Do what you do best and let us handle the heavy lifting.

What is DSCR?

The debt-service coverage ratio (DSCR) measures the cash flow available to pay current debt obligations. In basic terms, you take the rent and divide it by the PITI (principal, interest, taxes, and insurance) A number comes out and if it is 1.0 or better you will be on track to cash out refinance your property.

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Don’t let your equity just sit, utilize it!