Cash out refinance/ rental versus residence

[Alecia S.]

I own five rental properties and am in the process of doing a cash out refinance on one of them. I own my current residence and do not have a mortgage on it. Do you think it is better to do a cash out refinance on my primary residence to save in interest and receive more money to invest or to do it on my rental property. I could save about 300 dollars a month doing it on my home but do not know if I want to risk losing my home to invest in more properties. What do you think?

[John Warren]

@Alecia S. I have done both, and if you are looking to be aggressive I think it makes sense to do both! You can access more capital to invest, and you can put your equity to work. I like to calculate out my return on equity from time to time, and after a few years you may notice that due to appreciation your equity is only returning a small percentage. If you can put that equity back to work, you can make a higher return.