Refinancing Rentals in a Volatile Rate Market: When the Math Really Works
The Refinancing Dilemma
A 50-bp drop in rate feels like a win, but after points, legal, and reset escrows, many owners need 14–18 months of savings just to break even. Miss that detail and you trade liquidity today for negative ROI tomorrow.
Three numbers matter more than the headline rate:
- Total acquisition cost – Points, appraisal, legal, escrow reset, and yield-maintenance if you prepay an agency loan.
- Adjusted DSCR – New P&I against next year’s projected NOI, not trailing-twelve.
- Equity IRR drag – Cash-out proceeds dilute future appreciation; model that hit explicitly.
Turning Chaos into a Clear “Go/No-Go”
- Set a refinance trigger: PropTrust tracks live rate sheets and alerts you only when the net present value (at your hurdle) turns positive.
- Run a scenario matrix: Stress-test NOI, vacancy, and rate-cap costs in one click—no spreadsheet acrobatics.
- Lock or walk: If the payback is under 12 months and DSCR improves, pull the trigger. Otherwise, click Snooze and focus elsewhere.
In short, stop guessing. Let math—and software that won’t blink—decide when refinancing truly compounds your returns.