Pulling out equity will kill my cash flow but I want to grow my portfolio

[Roy Gottesdiener]

I own a rental portfolio that generates around $1,600 in monthly cash flow and has $400,000 in equity. I want to refi and pull some of that equity out ($200-$250k) so I can keep growing my portfolio but I'm not sure how to approach it as it would obliterate the cash flow I currently have, and in the current market I won't be able to make up for it with additional properties as they would also have minimal cash flow. I'm more concerned about appreciation and equity so I'm willing to trade the cash flow for it, but I don't want to be in a situation where I'm barely breaking even and the stress that comes with it.

Looking for ideas how I can tap into that equity to grow my portfolio but still getting some kind of cash flow to be able to make the monthly payments

[John Clark]

Quote from @Roy Gottesdiener:

I own a rental portfolio that generates around $1,600 in monthly cash flow and has $400,000 in equity. I want to refi and pull some of that equity out ($200-$250k) so I can keep growing my portfolio but I'm not sure how to approach it as it would obliterate the cash flow I currently have, and in the current market I won't be able to make up for it with additional properties as they would also have minimal cash flow. I'm more concerned about appreciation and equity so I'm willing to trade the cash flow for it, but I don't want to be in a situation where I'm barely breaking even and the stress that comes with it.

Looking for ideas how I can tap into that equity to grow my portfolio but still getting some kind of cash flow to be able to make the monthly payments

1. You don’t want the stress —- so don’t do it. If the investment isn’t a fit for you, don’t do it. Life’s too short.

2. you’re making a 5 percent return on total equity now, and surely much more on a return on investment basis. Do you think you will get those returns with new investments?

3. you want to grow. That’s nice, but why must you grow right now, particularly when you’ve already said you’re uncomfortable with the idea of expanding (stress)?

4. growth is not the goal, money is. Take a good look at potential purchase opportunities and run the numbers, then decide about buying, then financing. One of your risks is that you get the money first and then get into bad deals because you think you have a need to deploy the money you borrowed. 

So it all starts with yourself and your spouse first. What quality of life (stress) are you willing to trade for more money?