To sell or refinance an existing rental

[Sheena Varghese]

Hello,
Looking for some advice.

I have a property that has poor cash flow ($50) after all expenses and reserves are considered but it  has good amount of equity in it. It's a 2600 sqft home in a nice area but the schools are not the best so the renters I am getting are multifamily situations. I was thinking of either selling it or taking a line of credit on it to buy more properties and still rent it out without any cash flow but I will still have the property. Any suggestions/thoughts? TIA!

[Thomas S.]

I would sell, it is not a good investment income property and your money could be put to much better use else where. If you have equity in this property you have negative cash flow not positive. Every 100K in dead equity is costing you a minimum of $415/month in lost income. This assumes a mortgage at 5% and the opportunity value of cash at a minimum 10%.

Your property is a very poor investment.