What to do with my equity?

[Joseph Quarto]

Hello all,

So I have a Good problem I guess, but that does not make easier to decide where to go.  I was (am) a Dave Ramsey fan & spent a few years paying down our house AND a 5 unit Multi-use building.  I now believe this was a Mistake on the investment property.  I now find myself with good rental income, LOTS of equity and now what?!  

While I don't mind leaving something to the kids.grandkids, we feel were were the ones sweating & working to be in this position and want to enjoy at least some of it before giving any to Uncle Sam.

Here are some facts & some background;  Recently retired, comfortable, want to travel.  In process of selling our house, (should close next week).  We live part-time in the 5 unit building, and I DON'T want to be there full-time.  Would maybe like to find a 2-3 unit property to purchase on a lake, river, sound with a little land etc. for family get togethers, get away with some income.  I DO NOT want to really expand my Portfolio more than that, as I said I would rather enjoy retirement interests. We are Very conservative, have pension, SS, other savings...

So should I REFI, pull some cash, do a 1031 sale, sell outright & pay taxes....?? 

The 1031 exchange seems a lot of work, plus finding something in such a short time span 

I have done some looking into ReFi - seems I could get something for a 10/25 in the 4.8% range, (closing -$1,500-2,000k & appraisal in the same range).  Since we are used to paying around $2,400 including extra on principal over the years, we would actually lower that by a few hundred a month.  AFTER ALL expenses, including Mort., we would clear about $2,000 a month AND we live there free.  I could actually increase this by another $400-$500 if we moved from the larger unit to the smaller unit.

So here are the questions & things I am not clear about;

1) which way should I go? Another way I am missing?

2) Is the money I pull out taxable in the year I pull it.

So how much should I pull out?  Building will likely appraise in low 7 figures, our existing mortgage is about $50k.  We were thinking maybe pulling $300-375?? 

3) should I take the 10 year or 5 to 7 year options at a lower interest rates?

4) what happens after the 7-10 years, do I just Refi the remaining balance?

5) If we sold near the end of the Refi term, how is that $$ treated tax wise for Income Taxes

Whew, I hope I did not bore you all & at least some of you have read thru this.  All constructive answers greatly appreciated.

On a final note, do any of you reccommend any good honest, hardworking full-time brokers in the Mason County, WASh. area I can contact for properties available.

Thanks much, 

Joseph Q