6 properties with tons of equity….for now….cash out refi, heloc?

[Greg Link]

My wife and I own 6 properties with an average of 50% equity.  We have 2 residential properties in high traffic vacation rental destinations that we Airbnb. We own 2 commercial building that we lease out for a profit, and we have a primary residence with no mortgage that we periodically leverage for other investments with a heloc. And then we own a little summer cabin that we don’t want to get rid of. The thought is Selling one of our properties to pay a few other properties off makes sense in the near future, but it doesn’t solve any long term solutions, we would most likely need to buy another in the future to have the extra income to live the life we want in the future.  Plus we have great rates locked in for 30 years. Would a home equity line or a cash out refi make sense to have some cash if the market takes a turn and then we will have some buying power again If a down market comes.  We have built this with good income and good rates and then the housing market increased our values to make it really comfortable, but we don’t have any cash to ride out a correction if the market slows down or decreases.   My real question is do we hold onto everything and just save as much cash as possible or should we do some kind of refi, heloc to grab some cash especially if it’s against a property that has cash flow to cover the additional debt! What advice would you give us? 

[Arlen Chou]

@Greg Link I would assume you have good interest rates on these loans, so I don't think it makes much sense to go do a refi. Are your loans all with the same lender? In the past, I have reached out to my lender and asked them to give me a HELOC on the value of my primary residence PLUS a couple of investment properties. This essentially created a giant revolving line of credit. I would use that money to buy a property as a "cash buyer". Once I acquired the property, I would place debt on that property and pay back the loan on the HELOC.

Basically, I created a process where I looked like a cash buyer to the seller and took the pressure of funding a loan off of the front end of the purchasing process. This allowed me to take my time to find a good loan without worrying about not being able to close. 

Good luck!

-Arlen

[Jonathan R McLaughlin]

that equity will be your best friend if "the market" turns...but why would that actually affect you if you are holding with long term debt and positive cash flow? There are no long term solutions, just adjustments to current realities. Seems to me your strategy is working and I wouldn't be in a hurry to change it.

Not sure how old you are, what your lifestyle is like etc. Owning your primary "free and clear" may not be the best move mathematically/tax wise but it might feel awfully good :)

Having cash on hand is great, and you have room to leverage more comfortably if you wish. Helocs are adjustable so not sure thats a great "strengthen the bottom" move. Maybe a COF on one of the securer properties?

Have you thought about 1031 exchanging one of these properties to a different type of investment? You have some room to get creative on cash generation.

Good luck you are in a good spot as I hope you know.

[Alex Talcott]

Could be a good time to quasi cash-out-refi by way of bringing in a JV partner

[Jeremy Shepherd]

I would choose the cash out refi over the HELOC. Banks (lenders) have the power not to renew HELOCs and cancel LOC's...even with a stellar history, cash flowing business, excellent credit and low personal debt to income. Ask me how I know.