Understanding Return on Equity and when to Cash Out Refi?

[Waylan Liu]

Hi All,

My goal is to grow my portfolio to generate cashflow to live off of passive income. Mainly interested in BRRRR deals.
I have a couple SFH rental properties here in the midwest that are fully paid off. Having this equity sit around feels wasted and I could be using it more effectively to reach my goal.

Both properties' market value is about $220,000 and both cashflow $14,000/annually. ROE=6%

What is considered a good ROE? Can having too much equity be considered a bad thing? In this case I should do a cash out refi to invest in other properties, right?

[Mark H. Porter]

The ones at 12% float to the top and they’re out there.  You’re sitting on $1.1 million in buying power.  With rates in the mid-3’s you’d be crazy not to maximize your buying power and get as much leverage as possible.