Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes
I am thinking of cashing out 2 SFH, in class A/B areas. Gross rent for both is $3700 per month. If I cash them out to a 30 year FIXED mortgages, I would probably get $320K to $340K.
My monthly PITI payments would be around $2800 to $3000 per month.
Would you
1. Cash out, and use the money to continue the BRRRR strategy, primarily SFH in class A/B areas? (my current strategy till this point)
2. Cash out, and invest in MF?
3. Cash out and invest in something else, like notes!
4. Don't cash out. Get HELOC on both of them (to buy good deals when I come across one), and in the meantime use the cash flow to pay off my other mortgages.
(All my other rentals are cash flow positive, and low interest on 30 year FIXED)
5. None of the above, what would you do?
Any constructive feedback and thoughts are appreciated!
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
7y
Chris:
My thoughts...
The best way to grow fast is to turn equity to cash through a refi and use that to reinvest. #1 there are no taxes and #2 you are playing with the house's money. You just have to be conservative enough with cashflow to get through any bumps in the road. Sounds like you are doing the right things.
My reactions to your specific ideas are:
1) Great
2) Complicated. Only buy direct if you get good education. Only buy passively if you connect with a group where you can get good deals. Most of the PPMs I've seen outside if a tight-knit group are strongly favored to the syndicator and not the passive investor. (I am a syndicator myself)
3) Notes? Very different business model. It is usually reserved for those with too much cash and not enough time
4) HELOC is short term debt so best used for short term investments. If you want to use a HELOC to buy simply so you can move quickly on a longer-term buy & hold, I'd encourage you to then move it to long-term debt