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.