Family of 4 with 2 SFH rentals in Philly looking for next move

[Rachel Cox]

Hi!

My mortgage broker told me about Bigger Pockets and it looks like I came to the right place. My husband and I own 2 SFH in South Philly that turn an amazing profit because we bought at the right time. We are both in agreement that our biggest asset is the equity we have stored in these houses-- about $400k. The question is: What do we do with it? Our ultimate goal is to generate enough passive income to quit our jobs and travel with our kids whenever we want (WITH a nanny of course... that's part of my fantasy). Right now we're generating about $24k/year in rent, and my husband is the landlord.

It seems our options are:

• Take out a home equity loan on one or both houses and buy a larger, turnkey multi-unit. I've run these numbers and it seems like we would only add about $20k to our annual passive income. I know that's almost doubling the passive income but for such a huge commitment in time and debt, it doesn't seem quite worth the risk.
• Try a BRRRR using the stored equity and do a series of smaller and cheaper SFH. I'm still working my head around the numbers on this. I don't really understand the "Refinance" part.

I'm not considering flips because with 2 small children it would add a lot of stress to project manage something so huge. Also, it's a buyer's market in Philly right now. It seems everything has had a price drop. That's my anecdotal experience but I could be wrong. We feel confident in the stability of the Philly rental market.

Thoughts? Tips? I am excited to find a network of people who can help with these decisions because my husband and I keep talking ourselves in circles about it.