When I first rented out my property, mortgage was about $800/mo and I charged $1850/mo. The difference between the rent and mortgage was great. I didn’t have to worry about money for repairs, property tax, a gardener, or Waste Management. It was taken care of.
After a while, my house had enough equity that my parents really encouraged me to refinance. I didn’t know anything about it but I trusted them so I blindly followed. That was a mistake. This was a rare situation in my life when I felt I shouldn’t have followed my parents’ advice, but followed I did.
We refinanced the house and came away with a lump sum that was the exact value of the house. We paid off the remaining first loan. With the remainder of the money, we used it as a down payment for another rental property for my parents and for a new car. Around this time, my current car was recently totaled in an accident.
What I didn’t think about was that my rent was not covering my new mortgage of $1974/mo. I had to pay $124 out of pocket every month to cover mortgage. That meant I also needed to pay for repairs, property tax, a gardener, and Waste Management out of pocket.
By refinancing, it has been harder on us to budget and invest to be FI. It’s rather stressful in that I don’t know how to budget for the extraneous expenses of this rental property. In hindsight, I shouldn’t have taken the refinance. I would have been better off paying car payments and my parents could have probably gotten the down payment money from somewhere else sooner or later.