Help...Do I refi my cash flowing rental?

[Cory Pennington]

I have a nice cash flowing rental condo with approx $200k equity. This is my only rental/investment property at the moment and I'd like to refi to invest in more properties. My hesitation is the refi will change the property from cash flowing nearly $450/mo (which is hard to find in Atlanta) to less than $100/mo. That's all costs considered.

I'm hesitant to let a moneymaker go to barely performing, especially since rental cashflow is my goal and to quit my job and make real estate my full time, but if it's in the name of expanding my portfolio I think it's justifiable. Thoughts?

My plan is to flip a few houses and roll that money back into the condo in a year or so and pay it off or down...but what's the best tax strategy for that?

My other option is to refi now to get started and then sell the condo and cash out completely - but I'd like to keep it.

As you can see I'm conflicted.

[Cassi Justiz]

You could always refi and only pull a portion of the equity out. OR you could do a HELOC. I would probably prefer a HELOC if that's an option because you can pull the money out to buy another property, utilize the BRRR strategy and then refi to pay off the HELOC. You can do all of this while still cash flowing on the current rental.

I wouldn't take a performing asset and make it non-performing. This can impact both your debt/income ratio and the debt service coverage ratio for the property. This could hurt your ability to get loans in the future. Helocs will also impact the debt/income ratio, but you can always close it if you need to. You don't have that flexibility once you refi.