Cash out refi or Sell while market is high?

[Chris P.]

Good morning BP. We're looking to expand and up against a decision to refi or sell. We have 3 SFRs that we are debating on doing a cash out refi or selling for a down payment on a larger MFR.

If we refi we will still have 3 cash flowing properties and won't be on the clock for a 1031exchange and have a robust down payment available.

If we sell we're have a larger down payment. Will be on the clock for a 1031 but will have less roofs to worry about.

What other things am I missing?

[Dave Foster]

@Chris P.

1. The quality of the current rentals - stress test them to see what their performance will be if you refi

2. Factors potentially affecting future performance - Cap ex, state of the neighborhood and other demographics.

3. Amount of cash you will free with a refi.

Those are what you consider first and foremost.

Done correctly a lifetime of 1031 investing will have you paying 0 in tax throughout your lifetime.  It doesn't have to be just delayed.  But that's not your first consideration.  Its the tool if your current properties fail any of the 3 criteria above.