Cash Out Refi or Sell?

[Blake Morton]

First time poster here! I am currently living in a "live in flip" so to speak. I bought my house back in August of 2019 hoping to use the GI Bill while I was in college to get into real estate investing. Fast forward to today and I am wanting to move into another live in flip. My initial thought is the best case scenario would be to cash out refinance my current home (i'm estimating $30,000 in equity) and buy another house to do a live in flip so I can rent my current house and use the cash to put towards another house. My question is, would I be able to qualify for another mortgage after refinancing my current house? Selling is not out of the question due to the neighborhood being a C at best. My fiance and I own another rent house in a C+ to B- neighborhood as well that we definitely want to keep. The current live in flip is a 2/1 and the one I would like to buy is a 3/2. Long term I believe the 3/2 will perform better due to its size and being in a better neighborhood. Any input is much appreciated! 

[Timothy Boyd]

Hey @Blake Morton! Not an expert here, but my vote would be to keep the 2/1 and cash out refinance. This way you still control the asset for the long term, and you can take advantage of the current low interest rates. I don't think you'll have a problem getting another mortgage as long as the refi does not put your DTI ratio too high. Definitely something to talk through with your lender or with people smarter than I am on BP, but that's my two cents. Best of luck to you and thank you for your service to this country!

[Ian Plocky]

@Blake Morton, my vote is always to keep. 

In the longrun, you will never regret keeping Real Estate. In addition, your 30k cash-out is not taxable - but your sale profits are (even if tax-deferred through 1031). 

I agree with @Timothy Boyd that your DTI shouldn't be too high. You can even play with some numbers on DTI calculators and ballpark estimate where you will be after your Refi.

Cheers!