Trade cash flow for capital?

Question

I've got some equity in a rental, and I'm looking to scale up and buy more property. I can refi the rental and raise $30,000 cash. That would reduce net cashflow (income after all expenses) from $262 to $127.

What do you think? Is it worth loosing the cashflow for anther deal?

Account Closed · Answer

@William Wilson it depends on what you're trying to do and your personal goals.

Personally, I would take the refi, and use the $30k to buy another property. The goal would be that it would replace the $135 lower cashflow, but now I have tenants paying down two mortgages, and have two properties which may appreciate, and two properties to expense on my taxes.

Other folks would rather keep things simple and enjoy the $135 higher cashflow with fewer tenant/repair headaches.

Darius Ogloza · Answer

Yeah, what does that extra $135 mean to you?  Is it putting bread on the table right now or is it just beer money?  If the latter, by all means double down and strive to increase your total cash flow from the two properties.

William Wilson · Answer

Thanks for the feedback everyone. I'm proceeding with the refi. Another new deal will make up for the cash flow loss and multiply tax and equity benefits.

William Wilson · Answer

Account Closed, thanks for replying. I'm thinking along the same lines. Always interested in getting objective feedback. Thanks!

Bjorn Ahlblad · Answer

@William Wilson as long as you can still access capital for the unforeseen like 15k for a sewer job or 10k for a new roof, or 5k for your dog to have surgery, or you lose your job, then go for it.

People get into trouble when they are over leveraged and can't raise additional cash.

Wes Johnson · Answer

@William Wilson

Week the cash flow from the new deal make it worthwhile?

Jason D. · Answer

@William Wilson I would have written exactly what @Tyler Kennedy wrote, hes nailed it!

Trade cash flow for capital?

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