1031 or cash out refinance

[Francis Liu]

I have a rental in Reno fully paid off with current value of ~ $180k. Want to buy more rentals. Should I do 1031 exchange or do a cash out refinance? What are the pros and cons? Thanks

Regards

Francis

[Dave Foster]

@Francis Liu, Break out an Excel sheet. It's time to pro-forma!! Decide what the lowest NOI is that would make you keep that property. Then start comparing increasing debt loads to your current income/expense. If you can get enough out in refi (including costs of refi) to buy enough property to make a difference and still keep your NOI above minimum then go for a refi.

If you can't make the numbers work on that current property when debt is applied then 1031 is the answer.