Strategy for Orlando Rental Homes: Keep Your Low Interest Rate on Your Primary Mortgage and Buy a New House

Chris Rich

When the interest rates on houses soared in 2022/2023, many people stopped thinking about buying new property(s), including investment or primary residences.

Now that the market has stabilized, housing costs may not be as prohibitive, but interest rates are still a challenge. However, most people bought a primary residence before the madness, and many refinanced when rates hit historic lows, so they are hesitant to give up an incredible interest rate on their mortgage. Relatable.

Still, if you’ve outgrown your current house or have a need/want to move, what’s a guy/gal to do? The answer may be right in front of you (assuming you’re looking right at your current house).

The Rare Low-Interest Rate

As inflation drove mortgage interest skyward, those who bought or refinanced just ahead of the bumps are clinging onto those rates for dear life. 

With current interest rates hovering around 6.88% (at the time of writing), it’s no wonder. Roughly 90% of homeowners have an interest rate below 6%, and 80% have an interest rate below 5%. Many people (around a quarter of homeowners) have interest rates under 3%. These are staggering statistics when you consider interest rates have not been under 6% since early September 2022. 

Equity-Rich Properties

As of February 2024, median house prices averaged a 14% increase year over year in Florida. From January 2024 to February 2024, the median home price in the Orlando metro increased 4.7% from $360,000 to $377,000. The increases continued in March with the median price increasing another 2.5% to a near all-time record high of $386,500. The average home price increased 6.9% and 7.1%, respectively.

If you’ve owned your home for at least three or four years, you likely have more equity. If your property value is at least twice that of outstanding loans, your property is equity-rich. 

A recent study showed that nearly half the properties (46%) in the United States are equity-rich. Equity Rich means the combination of outstanding loan balances on the property are less than 50% of the home’s value. Some areas of Florida, such as Miami, have a much higher percentage of equity-rich properties, upwards of 61%. 

So, you’ve determined you have equity. Great, now what? Most people will sell the house and use that as a down payment on a larger house. But you can do something more with your assets. 

Hold and Rent

Even if you’ve never considered becoming a landlord, the current rental rates should make you think twice. You could tap into the equity in your current home (the one with the sweet, low-interest rate) and use that as a down payment on your new primary residence. 

Here’s the best part: once you find your new place, you can use the original home as a rental. The original primary residence pays for itself and will likely make you additional income (on average, $400 – $1,000 a month). Not only will it likely generate cash flow, but your tenants will be paying down the principal, and the property will continue to appreciate year over year in value in Orlando rental homes.

New to Real Estate Investing? Exploring Orlando Rental Homes

Maybe you’ve never thought about investing in Central Florida real estate, and you might be a little nervous. But it’s one of the best investments you can make in the long term, and it’s not difficult to learn how to become a real estate investor. Using a top-rated Central Florida property management company makes it even easier. 

If you’d like to learn more, check out our What to Expect section or call The Realty Medics at 321-947-7653 to talk to an actual human.