How to best position my personal finances for investing?

[Account Closed]

Hello everyone! This is my first post to the forum now that I am finally a member (I've just been stalking the site for quite some time now). I am 26 and really excited about starting my journey in real estate investing. Here is the situation:

I currently own no (money making) assets, and the only debt I have is a 15yr mortgage (balance of 110k) and a 5yr auto loan (12k balance). My home is worth 190k so I have 80k in equity. 

I want to free up cash to use for purchasing my first rental (strategy: buy/hold - niche: SFR or MF). In your opinion should I:

1) Cash-out refinance - free up the equity and move to a 30yr to minimize money going into liabilities, maximize money going into assets (Kiyosaki).

2) HELOC

3) Sell my home, buy a home half the cost and use the difference to invest? 

I'm leaning toward the third option because I could really keep my mortgage payment low while freeing up the cash. My wife is on-board to downsize as well, so bases are covered!

Thoughts? Is there anything else I should move around or ways I could prepare my personal finances before I make my first purchase? THANK YOU :)

[Wendell De Guzman]

OK let's do the math:

1) If you sell NOW

List price: $190,000
less seller concession (3% or $)

Most likely selling price: $184,300
less RE commission (3% since you pay yourself since you're an agent)
less 2% closing costs
less loan balance $110,000
Equals $65,085
less 38% tax (if you're in the top tax bracket and you can't wait until the 2 year period is over)

Net after tax $40,352

2) If you sell until the 2 year-period...you'll get $65,085

3) If you refi...and say get 80% LTV

New loan: $152,000
less old loan $110,000
less closing costs (2% or $3,000)

Equals $39,000 --> this is tax free
Then you can rent your house and generate some cashflow already.

You can then use your $39K cash as downpayment for your next property (maybe a 4-plex). PLUS you still have $38K in equity in your current property which hopefully, you can rent for positive cashflow.

4) You can also do a 1031 exchange (same result as #2 less some fees to the 1031 exchange intermediary)

5) or you can pledge the equity in your current home as collateral for a building - to further convince an owner to do seller financing (I've done this once but this is too advanced and unless you have done seller financing deals...this is not for the newbie)