Pull The Money Out Of My Rental House Now?

[Lauren Bateman]

I'm in the process of looking to purchase another multi-family property. I currently have a 2-unit property with long terms renters. I invested $70,000 into the house and I make about $500/month after all expenses.

I'm wondering if I should pull out all of my money from the house to invest in another property. If I did that, cashflow would go down to $150, but I would have non of my money in the deal.

What would you guys do? Would you refinance now while rates are low, or should I wait to refinance until I actually find the new property? Or would you do something completely different?

Thank you for any responses.

[Dan Schwartz]

Lauren Bateman if you are ready to find the next property, go for it. The $150 per month cash flow would then be on an investment of $0.00, since all of you money is out of the deal. Be sure to have enough reserves to handle repairs, as $150 per month might not generate enough income to cover a major repair. Even with that low cash flow, your tenants will be paying down your loan AND you'll be acquiring another cash flowing property.

We are in the same boat, and about to do the same thing, but we aren't ready to start shopping for the next property. So we will avoid taking out the loan just yet. If you're ready, though, go for it! (But don't forget your reserves!)