cash out refi to raise cash for future opportunities

[Fred Stevenson]

So I believe there are going to be a lot of opportunities in coming months to purchase assets at hugely discounted prices so cash will be king. So my question is this,  I have a number of rental houses that have significant equity. Right now my rental income pays for all my rental expenses including PI, taxes, maintenance, etc,  with money left over each month.  I've built up a decent cash reserve that could cover my expenses in the event that all tenants stopped paying for at least 8-10 mos.

I've heard some suggestions that it may be a good idea to do a cash out refi on some of these homes that have equity to have cash on hand in the event that some of these future opportunities crystallize (discounted homes, stocks, even opportunties in the beaten down oil industry).  The potential problem with this idea is that I would be increasing my debt (at very low rates of course). The rental income will still cover the additional debt payments, but, what happens if tenants start to disappear due to this poor economy? Then I wouldn't have the monthly income from rents to cover my new debt. Any thoughts? Did anyone do anything like this in 2009. 

[Fred Stevenson]

@Nicholas Lohr and @Jaysen Medhurst . So I just uncovered a much better route. I just got off the phone with my broker who manages all my equities through Schwab. He told me I can borrow 40-50 % against the value of my stock portfolio that he manages for me and the interest rate is 1.5 basis points over the fed rate which is basically zero. Meaning my rate would be 1.5%. The interest accrues over time and I can pay back the principle or interest whenever I want. No fees. 1.5% annual interest rate no fees. Holy crap. I may have to borrow money this way and pay off some of my friggin mortgages that are sitting at 4-5% right now. Amazed that I never heard of this before. No loan applications, no closing costs, low rate. It is variable but will always be just 1.5% over Prime rate.

The risks are if I borrow 50% and then my portfolio takes a dive then I would get a margin call, so to mitigate this I'll only borrow 20%. Other risk are rising rates, but they would have to rise a lot to hey higher than what I would get from a HELOC or LOC right now.

What do you guys think?