I am newer to REI, I have 2 STR investments and my own home. I have over 50% of my homes value paid off and 25% in each investment property paid off. Can one use equity in a property without doing cash-out refi?
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
4y
You probably can, but that would entail encumbering one asset for the purchase of another one. Cross-collateralizing assets creates a house of cards such that if one falls, the entire structure comes tumbling down. You don't have that issue if you simply do a cash-out refi and then go buy another asset using that cash as a down payment.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
4y
You probably can, but that would entail encumbering one asset for the purchase of another one. Cross-collateralizing assets creates a house of cards such that if one falls, the entire structure comes tumbling down. You don't have that issue if you simply do a cash-out refi and then go buy another asset using that cash as a down payment.
Lender · Durham, NC · Member since 2015 · 7 posts · 4 votes
4y
A HELOC on your primary residence is a solution that is not a cash out refinance. Many lenders can put this in place at little or no cost with an appraisal. Like Greg mentioned, cross-collateralization is the other option and would typically be done through a commercial lender.
Tongue in cheek, selling is also a way to use the equity in a home without a cash out refi ;)
Rental Property Investor · Franklin, TN · Member since 2019 · 160 posts · 125 votes
4y
You should be able to do a 1031 tax-free exchange of one or more of your existing assets (equity). Of course, that would involve parting with an existing asset to acquire a new and different (hopefully superior) one, if you chose to go that route. Check with your CPA.