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Updated over 6 years ago,

User Stats

109
Posts
52
Votes
Michele G.
Pro Member
  • Ann Arbor, MI
52
Votes |
109
Posts

Getting mixed advice: Cash Out Refi or Sell?

Michele G.
Pro Member
  • Ann Arbor, MI
Posted

After talking to several professionals (real estate, banking, CPA, etc) I am getting conflicting advice about what course of action we should take. I am not sure which move makes the most sense for us. 

We have over 10 years experience in long distance property management, but no experience purchasing investment properties (these were inherited). Our goals are to gain more experience in RE investing, scale up our portfolio, & increase cash flow.

Current Properties (in OC/SoCal):

Prop A - $350k equity

Prob B - $400k equity

Prop C - $530k equity

Cash flow averages $650/mo each after all expenses, vacancy, repairs, & capex reserves. All properties are slightly under market rent and are in the process of being brought up to market in the next 8-12 months. Newest tenant has been there for 6 years.

Advice given:

1. Sell Prop A in a 1031 exchange & invest in a small apartment complex with a max price of $1.0-1.2M.

2. Sell Prop A in a 1031, invest in a new property, & put remainder of cash in a TIC. This would be an option if I was unable to find a good property in time to satisfy the 1031 deadlines.

3. Cash out refi any of the properties at 75% LTV & buy new property.

4. Get LOC on any of the properties to pay cash for a new property then get a conventional mortgage to pay back the LOC.

If we sell, we would sell Prop A. It has the highest market value and lowest cash flow. I would prefer not to sell any of the properties since the CA appreciation has been so great and continues to rise. But I also want to build up our RE portfolio.

Why would you choose one option over another or would you choose a completely different option? I want to understand the reasoning behind a decision so we can figure out which option makes the most sense to us and works best to help us achieve our goals. Thanks! 

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