Sell, Pull Equity Out, Or Pay Off?
I have 3 SFH about 6 hours drive away from where I now live (we just moved). So far, we are making great rent on them (they are all positive cash flow) and have had great tenants. One of my houses has way too much equity in it, so my ROI is getting prety small. I paid 125K originally (10 years ago) it has been refinanced once. It is now worth about 250K and I owe about 95,000 on the loan). My payments are about $900 per month and I bring in $1750 in rent. I am reticent to sell or exchange it since the cash flow is so good, but I want to get the money out. Should I just pull the equity out with a refinance and reinvest it in another property? Or should I just keep the thing and try to pay it off so I can get the rent as income free and clear?
If you refinance and reinvest in another rental property, how much will your cash flow improve?
Don't look at ROI too critically. The cash flow numbers are more relevant at this point. Unless you have a compelling reason to sell, I suggest you hold the property. Unless you have an opportunity you can't refuse, I would not do a cash out refinance just now.
Your life circumstances could change overnight, so while you have all your options open, keep them all open.
If you aren't ready to sell and buy more units, you can use a HELOC, up to 90% of FMV on investment property. That way you can use the equity without incurring selling and either paying cap gains or having to setup a 1031.
If you don't want to make payments, then you can refi, but the CC make it tough unless you are lowering your rate, too.
It's a nice problem to have, though.
Peter