Sell Rentals and do Flips instead?

[Shawn Walters]

I have about 20 rentals that are generally all rented every month. Net cap rate on them are about 5-6% yearly. In the past 2 years I've stepped up doing flips and have found them to be more profitable and frankly more fun. Each one usually nets 9-15% pre tax ROI and if I do several in a year it's much higher once combined on an annual basis.

My question is this - Should I take a LOC out against maybe 5 of my rentals (they're all owned for cash) and use that money for additional flips. Or sell those 5 rentals (at a profit), and use that money for flips. Both have pros and cons. LOC allows me to keep the rentals, but that comes at a cost - $10k setup fees and ~4% APR on what I use.

[Robert Leonard]

@Shawn Walters If you sell and have a blast making a lot of money on those sexy flips, what will you do with the money that will give you residual income?  Can you make enough to live off of the rest of your life?  What happens if you get tired of flipping houses or if market conditions make it less feasible as a main source of income?

It sounds like you may want to consider trading to properties that will be more profitable.  Nothing against having some fun, get some of that, but don't throw out the baby with the bath water.