Should I pull more cash out of our primary residence?

[Adam Powell]

I’ve been a member of the group for two years now and got greatly side tracked for a while. I’m back and my goal is to acquire another rental property by The end of March 2019. I’m re-educating myself and searching for the “gem”. I’ve been looking at funding options and am considering pulling cash out of my primary residence to fund the next purchase. Our primary home is paid off and appraised for about $1m. We have a mortgage on it from our last rental deal where we purchased two separate units. Current mortgage is $121k monthly payments are $1,800ish including our primary residence property taxes. I know we’ll get approved to pull cash out but my concern is that we’re adding debt to our residence...I know we’re sitting on some solid leverage but am hesitant to continue pulling cash out of our primary residence. The two rental units are appraised at $70k and $160k and are free/clear due to the mortgage being on our primary residence. Any thoughts or guidance? What would y’all do?

[JD Martin]

Originally posted by @Adam Powell:

I’ve been a member of the group for two years now and got greatly side tracked for a while. I’m back and my goal is to acquire another rental property by The end of March 2019. I’m re-educating myself and searching for the “gem”.

I’ve been looking at funding options and am considering pulling cash out of my primary residence to fund the next purchase. Our primary home is paid off and appraised for about $1m. We have a mortgage on it from our last rental deal where we purchased two separate units. Current mortgage is $121k monthly payments are $1,800ish including our primary residence property taxes. I know we’ll get approved to pull cash out but my concern is that we’re adding debt to our residence...I know we’re sitting on some solid leverage but am hesitant to continue pulling cash out of our primary residence.

The two rental units are appraised at $70k and $160k and are free/clear due to the mortgage being on our primary residence.

Any thoughts or guidance? What would y’all do?

 Some of this doesn't make sense to me. Your primary residence can't be both paid off and have a mortgage on it. Those two things are mutually exclusive. It sounds to me like you have a mortgage on your primary home that you used to buy two rental properties.

*In general* equity sitting in your primary home is dead. It is worthwhile to have some equity as a safeguard against detrimental economic conditions. Do you think you can make more money from that equity than what it would cost you to access that equity (the prinicipal & interest on the mortgage)? If so, then financially speaking you should access that equity. If you are afraid to continue, then you have your answer.