Looking for advice

[Michael Tompkins]

So I am just getting started in real estate investing. I currently have approximately $100K in equity in my current home and can't decide what's the bast course of action to take. Should I sell it, do a cash out refi, bridge loan, etc...? If I keep my current house and rent it out it would cash flow approximately $500 per month. But I wonder if it would be better for me to sell it and reinvest the $100k into other properties through a 1031 exchange. Another benefit of selling my current house would be that I could use the $100k to finance my next project and wouldn't need to borrow money which would save me a lot of money in interest. Thanks in advance 

[Marcus Auerbach]

Quote from @Michael Tompkins:

Quote from @Nathan Gesner:

No. The best option is to keep what you have and save up for the next step. Increase earnings, reduce expenses, and save up for the next investment. The most successful investors sacrifice, at least getting started.

 Sounds like you take the Dave Ramsey approach of not borrowing money. But paying cash for real estate investments takes a LOT longer to build wealth than borrowing money to invest in real estate. 

Michael I don't think Nathan is suggesting a Dave Ramsey approach. You are right about real estate growing wealth faster than your two hands. The magic formula is portfolio size x time.

Selling does not move you forward. The market you sell in is the market you buy. 

Refi into 8% kills your cash flow.

HELOC is great for short term borrowing. 6 to 24 months max.

You are single, so financially your best move would be to house hack a 2 or 4 family home. Save up 5% down payment. Buy a property that needs work. Move into the worst unit and rent the other ones. Fix them up one by one. (actually exterior first, also lawn, landscaping) You can pay for the materials using money from your HELOC. When you are done updating all the units and renting them for more money refinance the property. They will give you 75% of what the property is worth. This has to be enough to pay off the old loan and your HELOC.

This is called a BRRRR and it works on a 2 or 4 family just as well. Be careful to not run up more money on the HELOC than you can get back from your refi of the multifamily.