Buying 2n Investment Property

[John Sherman]

Hey everyone,

I'm new to BP, but not to being a Landlord/property owner, since I've owned a SFH that I've rented out to graduate students in Long Island, NY for 18 years. However, I only recently finished "Rich Dad Poor Dad" and "The Book on Rental Property Investing" (thank you Brandon), so I now realize I've been something of a hobbyist, not the serious investor that I should have been trying to become. So, where do I go (grow) from here? Quick answer seems obvious - work on increasing financial intelligence and buy another property.

Ok, so buy another property - sounds good! How to go about getting the funds? Quick answer to that question that I've been debating, do a cash-out refi of the existing property, especially since we have equity and should easily be able to get $100-150k out and rates are at a historical low point. Or, perhaps it'd be a better idea to take out a home equity loan or HELOC?

Details on the existing property: It is cash-flow positive to the tune of approximately $300/month and we have roughly 3 months of cash/emergency money in the bank. Our existing mortgage on that house (15 yr at at 4.25%) will be paid in 6 years and yesterday I was quoted a rate of 4.75% for a cash-out 30 yr refi.

Tax considerations: we've owned the existing property as a sole proprietor and the Tax Cuts and Job Act has me considering LLC or even possibly C-Corp for tax benefits. However, as Brandon book points out, there could be large problems with your loan if the Lender finds out you transitioned to some sort of entity. Therefore, if we avoid refi, we could put the existing property into an LLC, or whatever makes the most sense, legitimately in 6 years.

Forgive me if I'm all over the place - I am posting for advice mainly because I'm in danger of "analysis paralysis" on this, and that seems to be 1 of the primary reasons investors fail to do anything. 18 years of time wasted/opportunity cost is bad enough ;)

Thank you all so much for reading - any help and advice will be greatly appreciated!!

V/r, John