Originally posted by @Ned J.:
@Austin Tam..... I'm in the exact same boat as you...central valley....got 2 properties that have a ton of equity and moderate cash flow..... and can't find squat in CA anymore that makes sense with the numbers.
So sell, them, and 1031 them into......what?...where?,,,,,,,CA is tough to find something else
Take equity out and buy......what?...where? again, CA is a tough market...
My one newbie advice is to be careful with how much equity you take out of them....if you go that route....don't max it out and risk being way upside down when/if the market corrects or tanks again..... only take out enough to free up some $$ to buy something else...don't overleverage them.....
Interested to see what the more experienced people say....
Hey Ned, thanks for the response.
If I max out the refi at 75% LTV on a 30-year fixed, my current below-market rental income will still cover the mortgage payment. We have plenty of room to raise rent, but just haven't done so because the tenants have been pretty much set-it-and-forget-it and we'd like to keep them there.
If I decide to go the refi route, I'm not worried about the market correcting/tanking. As long as the rental market doesn't crash, we can ride through a downturn. I'm risk averse so I've definitely explored the risks. My wife and I both work full time with good incomes, minimal expenses and zero debt (at the moment) so if the sky does fall and I'm not able to rent a 3bd2ba in Elk Grove for at least 1k, we can cover the loan with our paychecks.
But while we are on the subject of over-leveraging, would it be over-leveraging if I were to leverage on top of the refi to extend our buying power further? So Instead of paying all cash for a 225k property, use the 225k as a dp and mortgage 675k on a 900k property/properties...
