To sell or not to sell...

[Ariane Soffron]

Hi everyone! My name is Ari. I am new to Bigger Pockets and new to real estate! I found the podcast and haven't stopped listening once I started! I have a general question. I bought my home in 2013 for $165,000.00. I put 30k in to it for renovations and $42,000.00 down (25% was required by the association). Between now and then, I've paid about 20k in P&I. So I'm all in at this point for 92k. I owe 97k. The home will sell for nearly 300k in today's market. I'm looking at a couple different options. One, cash out refi at about 3.3% and pull 140k cash out to BRRRR. Two, sell, pull out nearly 200k cash and BRRRR. As a rental I will net $11,500 annually.. $11,500/$92,000=12.5%ROI. When the mortgage is paid .. net will be $17,500/$190,000=9.2%. This is ONE of a million questions coming your way as I try to navigate this decision and start my journey as an investor. Any and all insight is appreciated. If I'm not asking the "right" questions, please feel free to point me in a different direction or offer a different option/perspective. As a side note, this property is in South Florida in a very desirable area. Thanks in advance!!

[Ujwal Velagapudi]

I had to do a similar evaluation for a friend contemplating selling their primary residence or refinance. If you sell your home, will you buy a comparable home or downsize? If you refinance, are you going to re-invest that cash pretty soon?

My friends decided to stay in their home and not refinance (yet). They would've had to buy a comparable home, and it just didn't seem to make sense to get equity out when they have an option to refinance. 

Per the Fed's statements the past 4 months, they will not touch interest rates for a very, very, very long time. So you'll have the option to refinance, in my estimate, for at least 12+ months at these record lows. 

If you're on the thought that this is a market high, and think there will be some downturn, then you could consider selling at the peak right now and downsize considerably for a little while. You could then have that cash in hand ready to invest in the coming year or two. Unless you do something drastic like this, I think you're better off holding onto your asset and refinance when you think you are ready to deploy the cash into a new investment.