$90k equity. Should I sell or refinance to buy other properties?

[Kelvin Lozano]

Hi! 

I need your advice. 

I'm trying to decide if I should sell or refinance this property so that I can use the equity to buy other rentals.

I have a condo/TH that I purchased for $121k nearly 7 yrs ago. It's worth $148k today with an outstanding principal balance of $61k at a 4.875% 30yr fixed mortgage. It rents for $1295/mo.

I can refinance with a 30yr at 3.786% or 15yr at 3.064%. Or I could sell it at the end or the current tenants' lease (May 2018) unless they want to buy it before then.

What number crunching and wholistic analysis would you do in order to decide?

Thanks in advance,

Kelvin

[Dave Foster]

@Kelvin Lozano, because you have lived in the property for 2 out of the previous 5 years you can take all of your gain tax free if you sell.  You will only have to recapture the depreciation which will be minimal given that you converted the property this May.  No need to do a 1031 exchange

That alone doesn't make your decision since the real issue is what will be your net NOI on two properties if you refi vs what it will be if you sell and purchase just one versus what security you are looking for at this stage in the market and investing defensively so cash flow is downturn resistant.

Another option would be to look at where you're living now.  Would that convert into a rental?  Could you sell this property tax free and use the proceeds to buy another primary residence so you get preferential terms and convert where you are living now into a rental?