Pull Equity or Sell a residential to get into Commercial

[Mike Anderson]

Ive got roughly 100k equity in my rental property. I want to get into commercial, with hopes of getting more cash flow and longer leases. Im not sure if its smartest to pull the equity using a line of credit, or selling and doing a 1031.. Is it even possible to do a 1031 from a residential to a commercial? I feel like I can use that 100k to benefit me, and im sure there is 100 different ways to do that. Any and all advice would be greatly appreciated! 

Mike

[Greg Dickerson]

Originally posted by @Mike Anderson:

Ive got roughly 100k equity in my rental property. I want to get into commercial, with hopes of getting more cash flow and longer leases. Im not sure if its smartest to pull the equity using a line of credit, or selling and doing a 1031.. Is it even possible to do a 1031 from a residential to a commercial? I feel like I can use that 100k to benefit me, and im sure there is 100 different ways to do that. Any and all advice would be greatly appreciated! 

Mike

Yes you can exchange residential to commercial and vice versa. The best thing to do is run the numbers and let that make the decision for you. If you refi you will only be able to pull out 70-80% of the equity but it is tax free so you have more options and time to redeploy. The question now is does the property still cashflow with the new debt service, will it appreciate and what is the return on the equity remaining in the property vs what you could earn in a new investment.