Equity Harvesting - Good or Bad Idea
In one podcast I listen to on investing they discuss the concept of "equity harvesting" on their properties. The idea is simple, as your tenants pay down the mortgage and the property (hopefully) increases in value that you refinance at low rates and pull that equity out before a market crash and then let the tenants build it back up for you again. They say you can put this equity into new investments.
In theory this sounds like a great idea. However I am also a person that has taken the principle of low to no debt lifestyle to heart. I like knowing that I have properties with lots of equity and easily manageable monthly payments on them, especially as I approach retirement. However, I also realize my return on equity numbers are falling dramatically and that I could potentially put some of this equity to better use.
I just wanted to hear what others think of this concept and if you have properties with equity are you pulling it out? What are you doing with it? How does this fit in with your future goals and feelings on debt?