Cash out refi or deploy existing cash

[Stephen Lynch]

I currently own 5 properties (4 yearly rentals and 1 primary home that I occasionally convert to a STR in the summers). My first property was purchased for 439k and is now valued approximately 575k. I'm considering taking better use of that equity build up vs. letting it sit in the property but I already have ample cash on hand.

I'm a little gun shy about pulling the trigger on the cash-out refi simply because, I don't need the cash, I hate paying closing costs, and I like to see the loans go down - not up.  That being said - I feel like the equity is sort of a waste sitting in the property when I could lower the rate (from 4% to 3.25%), make it cash flow better and redeploy that capital (80k) to buy another cash flowing property (or two).

What would you do in this situation?

[Brian G.]

@Stephen Lynch I would also run a break even analysis on a refi. If you plan to live there longterm and you can lower your rate by 1% it's likely worth doing if you can break even (via lower payments) in 3 years or so...why not? You can still put a Heloc on it should you choose though Generally, a cash-out refi is the better tool for longterm use (ie buy/hold) and Heloc is the better tool for short term to midterm use (ie flip, BRRRR).