Good Problem To Have But Need Advice

[Ryan Wuethrich]

First post.  

I'm looking at starting a RE investment career.  My wife and I currently own two properties in SoCal.  One of the properties is paid for and the other has about 40% equity.  We have owned a few properties over the years but don't consider ourselves RE investors(yet).  We have a number of items to consider that are coming up that I'd like to get advice on.  Here's a list:

We are desiring a move out of CA. Considering SC, TN, GA, NC, MT, SD, ID.

Wife is set to retire from her current job in the next few months with a fixed pension. Is looking to get a different job once moved.

I would be leaving my current job and want to begin RE investing.  But, also willing to work a W2 job.

We both have 401k balances.

We have a 17(Jr.) and 18yr(Sr.) old still living with us and a mother-in-law(who does pay rent).

Should we sell paid off rental property, or cash-out refi?  

Should we sell both properties?

Timing is likely important.  We were initially going to move first and get work after moving.  We thought we'd buy a primary residence and then look to take on jobs or RE invest to generate cash.  I'm not sure what direction I can take to invest in RE if I don't have a W2 job.  My first thought is to partner with someone since I'd have funds and desire but have little experience. 

Anyone have any thoughts on this?  Are there other things I should be considering? 

Thanks!!!

[Ryan Wuethrich]

Originally posted by @Chris Levarek:

@Ryan Wuethrich Some great markets and market indicators in SC, NC and ID. So it sounds like you want to make a career out of it, to that end, you would probably benefit from selling at top of market. You could then get the full amount of equity out, allowing you to perhaps live off of 50% as you get your REI career going and invest 50%.

Without knowing what kind of Real Estate Investing you are looking to get into, kind of tough to advise but most jumps into real estate will have a ramp up period if you don't have experience. Thus it would be wise to keep some capital to support your lifestyle as well. 

If you do a cash out refi, you will most likely have to either take a lower cash-out refi to keep cashflow up or have a non-cashflowing property (not a good idea). However, entirely up to you. This would simply mean less equity to start the next chapter.

In both scenarios, what is the return on equity. If you leave capital in a low cashflowing asset because of refi, what is the return on your equity VERSUS if you pulled all that equity out and invested elsewhere ex. new career, mentorship, partnership deal, etc.

Your Return on equity will definitely go further in NC, SC or ID then California in most cases. So good move!

Happy Investing!

 Thanks.  Actually, what you have said is pretty much exactly what I was thinking. Sell both houses.  1031 a rental property while also buying a primary residence.  I'm eager to get going in multifamily properties.  I was looking to actually build to rent.  I just don't know how any of this will work if I don't have W2 income.