Keep it or Sell it or Pull Equity & Buy

[Matthew Cyriac]

Hey everyone super excited to BP and learn! My strategy is to Buy & Hold. 

So I have one rental which previously had been my primary residence. Here are the facts: 

• Purchase value: $280k, Current Appraisal: ~ $500k, current mortgage: ~ 200k, Rent - $2400, Mortgage (including escrow): $1300, Net Cash flow: $1100, I last lived there in 2018. So I need to make a decision soon if I am going to keep the house or sell it. 

1. If I sell it - I plan to use the funds to buy another rental. 

- Reasons for selling it, it's a long distance.I live in TX and the house is in CO and CO house market has been appreciating, so can generate enough equity for another property without the burden of a heloc/FEL.

2. If I keep it - I will need to pull out some equity to buy another rental (I know the limitations of pulling out equity of rentals - thank to BP :) ).  

- Reasons for this option, the Dallas market is just as hot, so still buying at an appreciated value and ability to use funds from HELOC. Of course, there's an increased risk/leverage as the rental needs enough funds to pay for the mortgage and pay the HELOC.

Based on the extensive experience on these forums - is one option better than the other? 

Is it common enough to take out HELOC to use it as a downpayment? Realistically speaking, the cash flow the current rental would pay for a good portion of the HELOC.

TIA