Is it better to rent, sell, or both?

[Kenneth Peagler]

I inherited a property with a ridiculous amount of equity in a nice area.  Would it make sense to just rent it out and refinance or sell it and try to buy a 3-4plex which more cash out and leverage?  House has no mortgage - worth $300k.  Rents in that area are around $1500 a month.  

[Kevin Sobilo]

@Kenneth Peagler, you inherited it at the stepped up basis (current value). So, if you sell it you aren't in for a big capital gains tax bill. A big plus.

If you refinance a $300k house and rent for $1500 you will likely be losing money each month.

If you rent without refinancing you have a liability out there in case someone sues you because you have so much equity. Also, your equity isn't working hard to bring home cashflow.

If you are serious about having rentals, I would probably sell and look to buy good cash-flowing rentals with the proceeds. You can sell and buy over $1 million in good rentals with that property and some mortgages.