cash out refiance question

[Bill Zarzecki]

Looking to start purchasing homes for buy and hold rentals, I'll probably do a cash out re-fi on my primary residence. Does it make more sense to cash out and rent my current home to a tenant, or use the cash out and purchase 1 or 2 rentals? My wife wants to move, and I want to acquire as many properties as quickly as I can for cash flow. Just curious if anyone has done anything similar to this, or has any advice on a good strategy, thank you

[Jaysen Medhurst]

@Bill Zarzecki, you house probably won't make a good rental since it is under the 1% rule. I would do one of the following:

1. Refi into a fixed-rate 30-year loan. Your ARM will likely adjust up to roughly where we are now. Then open a HELOC to get at some more equity. You'd have ~$40k+ with an 80% LTV and higher LTVs are out there.
2. Sell the place and move to a new house or roughly the same price, putting down 20-30% and keeping the rest of your cash for REI.

Resist the temptation to "house up" to something more expensive just because you can afford a larger DP with the proceeds of selling your current home.