Is it good to do cash out refinancing now?

[Lilly Fang]

I have a rental property with about 82K mortgage left (interest rate was 2.85% 15 yr fixed). The property is worthy about 400k now and I intent to keep it for years. I don't like to see the cash stuck in the house, but I don't know what to do with the cash if I refinance out. The stock market is uncertain and the real estate market is kind of high right now.

The loan agent told me this:
Assume house value $400K. You can do cash out up to 60% of house value, which is $240,000. After paying off the current loan balance of $82,000, you will have $158,000 in hand.
30-yr fixed rates:
- 3.625%, monthly P&I=$1,095. No point, you need to pay all closing costs (Total closing cost is about ~2500 if appraisal can be waived, else it is around ~$3000)

[Ben Zimmerman]

Doing a cash out refi at these rates can be a fantastic idea.  You just need to find a good way to put your new cash to work for you such that you earn higher amount of interest than you pay out.  

$158k will easily be enough for a downpayment on another property.

Even though single family homes are fairly pricey right now, apartments and REITS are actually relatively cheap right now.  You could passively invest in apartments and mortgages with companies like Fundrise, or publicly traded REITS like Avalon Bay and Equity Residential that are both trading at a significant discount considering they are collecting less than 1% fewer rents this year during Covid than they were last year.  

Or you could simply use websites like BlockFi and buy either crypto currency like bitcoin and etherium and collect 6% interest on bitcoin, or 5.25% interest on etherium while you (hopefully) also get price appreciation.  If you don't like the instability of crypto, you can instead buy stablecoins like USDG whose price doesn't fluctuate.  1 USDG coin is always worth 1 US dollar.  You can earn 8.6% interest on USDG coins on over-collateralized loans from BlockFi.  I've used BlockFi for a few months now and they calculate interest daily, and pay out on a monthly schedule.