Cash out Refi and wait

[Zachary Freeman]

Hi I am looking for opinions on the following strategy. I have a 4 unit property in LA area worth about $1mil with $500k equity. It nets $1500/month after debt service. I am considering pulling $200k out for investment in a new property.

However, unless I find an outstanding deal I am most likely going to keep the cash on the sidelines for 6m to 2yr waiting for some correction in pricing. I will keep the cash in stable low risk investments and some blue chip high dividend stocks in an attempt to tread water until I invest the funds. 

The cash out refi is at 4.6%; the existing loan is 4.3%. I don't want to wait until investment time for the cash out refi because I believe interest rates will be considerably higher. Basically, I am trying to lock up a loan at today's rates with anticipation of higher rates and lower prices in the near future. 

Thoughts?

[Joe Villeneuve]

As I look at your numbers, I see that you are in a 1M property, but only getting 1500/month in CF.  Ouch!!

Then, I look at having 500k in equity, as in your money, with a return of only 1500/month.  Ouch again!!!

Now, when I look at this a third time, at the potential with the 200k from a refi, and the struggles you are going to have in the market of choice to put those funds into action, I see a reduced CF while your refi funds are taken, but sitting on the sidelines...you're better off leaving it in the property until it would have somewhere to go...your next investment...see @Mike Hanneman

Me, I would take the money and run, to a different market, where your money (equity = $500k), could get you a lot more than just $1500/month.  Maybe that's because I'm familiar with other markets where $100k would get you that same $1500/month, so I'm seeing the potential for $7500/month in those markets.