Cash out refi to purchase multi family investment

[Nicholas Baughman]

My wife and I bought a home in Clairemont (San Diego) back in 2011 for $330,000. Now it's probably worth close to $550-600k. I'm trying to get my foot in the door to invest in real estate. The option I have now is pulling equity out and finding a multi family unit somewhere south of the 8 (where it's more affordable). My problem is convincing my wife that using the cash out refi towards an investment property rather than remodeling the kitchen would be a better thing to do. I currently have a 30 year fixed VA loan at 2.75%. If I pull the cash out 100-125k it will increase our mortgage ~$600 more a month and the rate I'd be at is 3.75% (depending when I lock it in). Now the broker I'm working with says I could always buy it down to 3.5 or even 3%. I think I agree with him on this. The problem though is now I need at least 25% down on an multifamily (which would eat the cash out) plus finding a property that has renters who are paying enough rent to compensate for the increase at my primary. I feel it's best to get started investing in my backyard first and become more familiar with all the processes. However, San Diego, as I'm sure you know, is a tough market. Should I just forget about starting here and look elsewhere? Do you have any advice on trying to get started here? Is my plan flawed? Should I pull equity out now and sit on it? If I pull equity out now before the market softens Ill get more at lower interest rates but if I wait until it turns downward then I risk a higher interest rate and less equity. If I pull it out now and wait then I will eat it until I think the timing is right and don't think that's a good idea. I apologize for the long-winded message. I'm just trying to find some answers and to get in the game. Thank you for your time.

[Alex Deacon]

@Nicholas Baughman Nicholas if you have ever read the book Rich Dad Poor Dad you will know that there is good debt. (Cash our refi and reinvest. ) And bad debt. (Cash out refi and install a new kitchen.) A new kitchen is not an investment. It will increase the value of your home but usually not dollar for dollar. You will enjoy the new kitchen and you cant put a value on that of course.

As long as you and your wife get on the same page and you make the right choices in your RE investments then I am all for cash out refi and reinvest. I own an extensive portfolio in PGH PA and I buy 5 properties a month but I say that not to impress you but to let you know its taken me 25 years to get to this point and I have taken a lot of wrong roads and made a lifetime full of mistakes.

Take you time and make sure its the right investment and you cant go wrong.

Also one more thing. Happy Wife Happy Life LOL. There in lies the real dilemma 

Best Wishes