To Cash out Refi or not?

[Matt F.]

Hello all,

I am currently trying to figure out if I should cash out refi and buy another house in cash, or save up and acquire another house with a mortgage. My strategy is to buy houses that need work (so its below market value) and then rent them once repaired. My goal is to have enough cash flowing properties to where I can build cash as fast as possible, buy more houses, and at a certain point begin paying them off/retire.

Basically the only advantage I see in doing a cash out refi is that I will have the money to buy a property in cash. My issue is that if I cash out refi, my cash flow will go down slightly (because the houses have appreciated in value since i bought them), and this is going against my goal of building cash flow. The advantage is that I can buy another house with cash (and own it - supplementing cash flow drastically). I have done the math, If i acquire another property with a conventional 20% down mortgage, then I will cash flow the same as if I did a cash out refi and bought one house in full cash and rented it. 

This is where I am stuck, which is the better strategy? Cash out refi or go conventional and end with the same cash flow?