Sell, cash our REFI or HELOC

[Tara Faulks]

I have a condo in Hoboken NJ with 300k in equity. We purchased it in 2008 for 440k and it's estimated value today is 700k. It cash flows 250+ a month which is positive but has remained steady for the last 5 years. Appreciation continues in the area and is expected to continue but is growing slower than the past. We are now actively looking to buy a couple investment properties. With $300k in equity that could be used to help fund future investments we are trying to see the best way to leverage this. The options we seem to have are sell and use a 1031 exchange, do a cash out refi or take our a HELOC, none of which we have experience in. The 1031 timeline scares me and although the return on the property is good And safe, I think we can do better with our new properties. The cash out refi might not allow us to cash flow which would be a problem and I hear HELOCs aren't easy to come by right now. Does anyone have any experience is these areas and making the best decision? What did you do and why? What other factors should I consider? Would love some First hand information so we make the best decision possible.

[Dave Foster]

@Tara Faulks, I appreciation is still a factor then this property might be worth holding on to as it's has a great run to date.  But right now you're actually probably losing money on it.  The return on equity is about 1%  and depending on what you count in your cash flow number may not include allowances for those nasty unexpecteds.  

A refinance would unlock the cash.  But that just drives the performance of this property down further.  Fear of the timelines of the 45 day identification can be daunting.  But honestly it's usually more perception than reality if you're proactive and focused in your search.  And moving the direction you are (from more expensive to less expensive properties) is a much easier 1031 than trying to go to a more expensive property like a multifamily - they're just harder to find).

Given the numbers a reverse exchange would be a viable option for you as well.  That would save the angst of finding a good replacement.  But does shift that to pressure to sell your old property.