What's my next move

[William Powell]

I own 12 properties. I've cashed out a property to receive a $100k loan/payment. I planned on using the $100k and fixing up 2 properties. My new MTR and my apartment complex. But after finishing the first MTR I'm left with only 35k. I need to keep the 35k to operate and as a small cushion just in case stuff goes wrong with other properties. The apartment needs about 30k to finish.  Now I'm faced with some choices. Cash-out the newly rehabbed MTR property. It's probably worth 160-170k. 75% of that gives me 125k then finish the apartment rehab. The second option is cross-collateralize all my assets which would give me a much bigger bag, then I could fix the apartment and buy more real estate for flips, buy and holds, and whatever other strategy I decide. 3 sell the MTR outright and get about 150k but lose the MTR cash flow.  Any thoughts will be appreciated. Is there another choice I haven't thought of?

[Andrew Postell]

@William Powell it's really hard in this type of a setting to provide good feedback.  We can't see numbers, credit, assets, etc. so sometimes what we say when people are looking for this specific of feedback is limited to say the least.  Here's my initial thoughts though:

1. If you knew you needed more money, why didn't you just do a bigger loan at the time?  If you refinance again, then that's more closing costs.  It's better to do as few loans as you can, if possible.

2. If your apartment complex need renovations, why not just use a loan on that property to finish the renovations?  I don't like to cross collateralize assets.  I want them to stand on their own.  Now, this is just my opinion on it but if the asset cannot stand on it's own...then I shouldn't own it.  Maybe there's some reason why we can't do a renovation loan on the apartment?  But I would like to see us try there.

3. Did you purchase that Mid-Term Rental with cash?  If so, then yes, cash it out.  Cashing it out is tax free money.  On your balance sheet you already spent money to acquire the asset to using that asset to replenish your cash is reasonable business accounting measures.  That would seem like the obvious choice here. 

4. I don't like selling, unless there are specific reasons (like I'm upgrading the assets or investment) and if you do "cross collateralize" anything I would suggest a Line of Credit.  Use that line of credit to acquire assets, then refinance those assets to pay back the Line of Credit.  There's lots of reasons for this but I'll limit to just this comment for time right now.

I hope all of that makes sense.  Thanks!