How to turn equity into more homes?

[Nicholas Sander]

I currently have a SFR rental in Los Angeles area which breaks even. It has a $150,000 in equity. The home I live in has $100,000 in equity in the same city. I would like to turn that equity into multiple rentals or use the equity to flip homes. Would selling the rental and use profit to buy multiple make sense?

[Erik W.]

@Nicholas Sander, I think the first question is how do you plan to do better if you do buy more property?

You presently have a rental that only breaks even.  I do not know your level of experience, but I am guessing based on your post you're pretty new to the game and/or have only this one property.  Is your goal to buy cash flowing properties or to turn one break-even property into 2 or 3 break-even properties?

I know some investors do nothing but chase appreciation.  Alright, that's fine if that's your plan.  But appreciation doesn't pay the bills.  Equity gained from loan amortization doesn't pay the bills.  One $10,000 roof replacement turns a break-even property into an alligator that you must feed or it will eat you alive.  It can also be very discouraging if you find out 3-4 years down the road that you bought in an area that never appreciates or was at the top of the market when you bought and values are stagnant or falling.

I'm a cash flow seeker.  Cash flow puts $$$ in my pocket today that I can spend today.  Equity is icing on the cake.

What's your goal for wanting more property?