Cash out Refinance of Rental Property for my Son

[Kevin D Key]

I am a retired 63-year-old military veteran considering giving a rental property to my only son, a 22-year-old senior in college. The rental home in San Antonio, TX is completely paid for and has a market value of about $356K. Option #1 I'm considering using a Cash-out Refinance to take out 80% of the equity $284K to use to help my retirement. The house will then continue to be a rental property using a Property Manager and having good potential to appreciate in value but will have only a small cash flow. I'll use a "Transfer on Death Deed" to give the house to my son after I die (which would avoid probate.) Option #2 that I'm considering is to sell the house using a Real Estate Agent which will cost approximately 9% total (in agent fees and closing costs) plus additional Capital Gain Taxes (about 15% of the capital gain of $150K which would be $22K). My federal tax bracket is 12%. I would use some of the remaining profit to help my son with a down payment on his 1st house. Which Option do you recommend to help my son get a good start on life after he finishes college.

Concerned Dad