Should I sell my house and use equity to invest?

[Stephanie Harley]

Hello,

Just discovered bigger pockets and excited about investing and looking for financial advice.

-purchased home 2016 $0 down 3.75%

-with mortgage plus monthly costs, it currently rents with a cash flow of $850 monthly (low maintenance, strong rental market)

-I could sell the home today and have $325,000 liquid, $0 debt

Should I be doing something better with my money?

I own raw land that I am interested in building a small rental on, but besides that, I don't know what investment would create the most return.

Also, I love to travel and currently live in my RV. So I don't need a home to live in. I'm more interested in using my home as an investment than comfort.

I am not great at math, so here is where I am confused on what to do...

$850 cash flow X12 months is a $10,200 profit.  If I invested $300,000 in tax liens, I could earn 9 percent. $300,000 X 9= $27,000 per year?

Not sure what I am failing to consider.

Please let me know what you think, and if you have any recommendations for advisors.

Thank you,

Stephanie

[Scott E.]

Your head is in the right place when looking at the math.

Right now you're bringing in about a 3% return on your equity in cash-flow. But you should also be accounting for principal pay down and forecasted appreciation on this asset. That 3.75% interest rate will be hard to let go of.

If you deploy that $325k elsewhere, you can probably do better just from a cash flow perspective. But tax liens? That is a very specific and nuanced niche. Are you prepared to dedicate the time and energy into learning a much more abstract way of investing in real estate?

My 2 cents is hang onto the property that you own. Get a HELOC so you have access to the equity in the event another opportunity presents itself. But you won't have a payment on that HELOC until you borrow from it.