Maximizing Equity in Rentals

[Steve Burrell]

Curious how others would handle this situation.

I’ve purchased, rehabbed, rented and refinanced several homes in the Denver area. But, our best cash cow has been the home we first bought for ourselves in 2012 and now rent for $2200 a month. We are currently cash flowing close to $1000 per month on this one door alone. It also has more than doubled in value.

We have yet to tap into it, since our initial rate as a primary residence was 3.75%. But, with rates at 4.125% now, we could easily cash out 100k (even more if I wanted) for even more deals. That would, of course, eat into the cash flow to the tube of about $375 per month.

Am I overthinking this? Should I OBVIOUSLY take the cash? Is there an argument for keeping my lower payment and huge chunk of equity intact?

Any input would be swell!

[Craig Curelop]

@Steve Burrell - This is a great problem to have! As with almost any problem in real estate, it all depends on your goals. Chris' options serve as great ones. 

However, if I were in your shoes, I would get a HELOC on that first property because A HELOC gives you the "option" to purchase another property if you come across the right deal. Whereas a straight cash-out re-fi will automatically increase your payments and thereby kill your cash flow immediately. I am a huge fan of flexibility and having options when it comes to purchasing real estate.