Leverage Strategy Calculator — Refi + Buy vs Refi + Invest
Model whether a cash-out refinance is worth it. Enter your existing property, a refinance scenario, and either a new rental purchase or a market-return assumption — see monthly cash flow, cash-on-cash return, and 5-year net worth for all three strategies side by side.
Frequently Asked Questions
- Is my data stored?
- No. Calculations run entirely in your browser.
- What is cash-on-cash return?
- Annual pre-tax cash flow divided by the cash you actually put into the deal (down payment + closing costs) — a common way real estate investors compare returns across different amounts of leverage.
- What does "break-even months" mean?
- How many months of positive cash flow it takes to recover the cash-out refinance's closing costs — shown as n/a when a strategy never breaks even within the model.
- Which strategy usually wins?
- It depends on the spread between your new rental's cap rate (or market return) and your refinance rate. The tool highlights whichever strategy produces the highest 5-year net worth for your numbers — there's no universal answer.
- Does it model taxes on rental income or capital gains?
- No. Market returns are nominal and rental income/appreciation taxes are not modeled — the calculator is directional, not tax advice.
- How is appreciation handled?
- The model assumes 3.5%/year home price appreciation on all properties held. Vacancy, taxes, and depreciation are lumped into "monthly expenses" — tune that field carefully for your market.
How to compare cash-out refinance leverage strategies
- Enter your existing property. Plug in market value, remaining loan balance, monthly rent, monthly expenses, and your current interest rate.
- Model the cash-out refinance. Enter the cash-out amount, new interest rate, loan term, and closing costs — the tool computes net cash after closing.
- Set up Strategy B or C. For Refi + Buy, enter a new rental property's price, down payment, rate, and rent. For Refi + Invest, set an average annual market return (e.g. S&P 500 ~8–10%).
- Compare the results. See monthly P+I, cash flow, cash-on-cash return, break-even months, and 5-year net worth for Status Quo, Refi + Buy, and Refi + Invest side by side, with the winning strategy highlighted.
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Use Cases
- Decide whether to cash-out refinance a rental to buy a second property
- Compare refinancing into another rental vs investing the cash-out in the market
- See how much a refinance's closing costs delay break-even
- Model the payment jump from a low legacy rate to a higher refinance rate
- Stress-test which leverage strategy wins if market returns run below the S&P average