Is this a good strategy? Las Vegas

[Oliver Martin]

Hi everyone! Is it a good idea to cash out refinance my free and clear rental properties for about 70-80% LTV, and use the cash to buy my next primary home? The purpose is to lessen equity in rental properties, take advantage of low interest rate, decrease rental income therefore reducing tax liability, lesser equity could also mean lesser incentive for frivolous lawsuits. And buying with cash could also help me get some discounts when buying a property at a softer or less competitive price point (>400K in Vegas).

Once I buy my primary home, I could refinance it to further reinvest the cash or save the cash for future purchase when the interest rates eventually go up in the near future. I could also just keep my primary home free and clear, and enjoy mortgage-free living since most of my income comes from my full time job. This will give me some financial freedom and also help me save faster for the next investment.

Is this a good strategy or I'm missing something? My main question is in paragraph 1. Paragraph 2 is just a follow up question or just an idea on what I plan to do after. 

Thanks in advance. 

[Cody Backus]

Here is another thought. You are going to pay a lot in income taxes when you sell those houses that are all owned free and clear, are you not? Capital gains will eat your lunch. I agree that having that much in equity out there can create a risk though. Two options. 

1. Strip the equity. Borrow against the equity with a HELOC (also called "equity stripping"). Your net income from rents will drop on each property because you will have to service the debt and then use the HELOC proceeds to either pick up more rentals (without the equity risk) or purchase your personal residence.
2. Seller Finance. Sell these homes Seller-finance with some cash down. You become the bank and get some cash in your pocket. No equity out there at risk of trip & fall, etc. Who doesn't want to be a bank. They are the ones making all the money. If you get into trouble personally, risk from the top down, these Notes could be at risk, but that is why they should be held by your legal entity. This gives you some money in your pocket (from the down payment) to make the next downpayment on your personal residence, but keeps you in a position to continue creating income. You also have the ability to foreclose if needed so your money is secured by the property but without the headaches of being a Landlord. There are plenty of people who would like to buy seller-finance properties.  

All depends on what you want long term.