Cash Out Refi Evaluation

[Brian Slater]

Hi All,

I am new to BP but have had my first rental SFH since 2011. While I definitely jumped head first into this deal and make some mistakes, I did have some help with some experienced people around me. I also lucked into a greatly appreciating area of Houston, so I have a good problem to ask about today. I have the real estate bug now and am looking to get out of the corporate world down the road. via real estate investing.

I would like to pull money out of my first rental home, which has appreciated substantially since 2011, in order to continue funding buy and hold rentals.  My issue is that I can potentially pull out enough equity from the home to send my cash flows into negative territory.  Is this an advisable move?  I would use the equity to purchase homes that would generate positive cash flow of course, but I am just looking for some general advice around the idea as a whole.  I realize I haven't provided much in  term of numbers, but I can if that would be helpful to evaluate the decision.  Right now, I am just more interested in hearing people's thoughts and experiences around the idea altogether.   Obviously I may have issues even getting a refi loan if my cash flows get too negative, so I will have a ceiling regardless.

I am fairly confident that the home I would pull the equity from will continue to appreciate as that area of Houston has great long term potential, and nearby homes are constantly being torn down or renovated which is driving the land values up.  I also have a great long term tenant in the property.

I appreciate any input anyone has on this! 

FYI - I will be away from the computer a bit for the long weekend, but I will definitely catch up on responses!  

Brian