Help! Utilizing equity in current rentals

[Brooke Hunt]

Hi,

I currently possess three cash-flowing single-family rental properties in Arkansas that I purchased within the last three years. I am looking for advice on the best approach on utilizing the equity in these properties to acquire a 4th. I am still new to investing and would appreciate any advice. 

Thanks!

[Konstantin Ginzburg]

If you have enough equity in the properties already, then using a cash out refinance could be the strategy you are looking for to pull capital/equity out of the 3 homes you have now. One thing that you really need to keep in mind though is that a cash out refinance would cause your new mortgage to be set at the current market rates. Considering how much interest rates have gone up in the previous year, this will likely lead to much higher mortgage payments for all of your properties. Because of this, I might be hesitant to use this strategy unless you have a property selected that is a home run. Any return on investment from this 4th property would need to be high enough to offset the additional cost of capital from increased interest rates to justify it from an investment perspective.