Cash out refinance from a rental property

[Ali Kattan]

Hello all,

I have a rental property that I purchased a few years ago for 85K. I’ve had wonderful long term tenants and I owe 60K on the mortgage. I’ve been doing some research and the property value is around 130K in today’s market.

I’ve met an investor in the area who has over 50 rental properties that he wants to sell. He’s willing to land contract the properties. I was thinking of cash out refinancing my rental property and putting that cash as a form of down payment on two or three land contracted properties. My thought process is if I let those properties pay the land contract off (through the tenants in them), I would have 2-3 properties paid off in 5 years.

Would this be considered a bad strategy? Is there another method that is better than this? Any of your insights or thoughts would help!

Thank you,

-Ali