Cash out refi into higher rates?

[Greg Seivert]

David Greene answered a question on the podcast and I want to ask about everyone's personal experience with this.  Like many investors now, I have equity in properties with interest rates under 3%.  Should I cash out refi to a 5%+ rate to reinvest the equity?  The current cash flow gets squeezed a bit in order to go for more appreciation and cash flow from additional properties.  David Greene says go for it.  What do you say?  

[Zach Lemaster]

@Greg Seivert

All comes down to the numbers and the plan of what you're going to do with the equity. It's really less about rates. Will you be able to yield a higher return investing the money in another project vs keeping it in your property, then it's an easy yes, but you need to make sure you actually do that. You could use a HELOC as mentioned previously that allows you flexibility in how much of the funds you use, and lowers your payment as you pay principle back. 3rd option is sell & 1031. There is such a thing as return on equity, and if you are not using it strategically to grow your portfolio, your return is zero (or likely negative due to inflation).