Investor · Atlanta, GA · Member since 2014 · 10 posts · 2 votes
Hey guys. I have about 400k in equity in my home and another rental property. I already own 30 doors, but I’m trying to get to 100. Would you pull out that equity to buy a 1.3-1.6m apartment building or would you leave that equity alone and continue to build up your savings to get a 25-30% down payment? I’m torn between paying off home and quad from work income ( I owe about 200k total) or pulling out money to invest for more cash flow. Any wisdom appreciated.
London · Member since 2019 · 722 posts · 386 votes
7y
Manuel, I think you have conflicting goals. That said, it could be how you are framing the question.
If you are good at operating the properties you have so far, can you bring in other investors for future deals (using a legal process)?
Do you enjoy the day job?
If you flipped a coin, would you rather have 100 units (heads) or a home that is paid off (tails)? I find that flipping a coin can help you get in touch with your emotional preference. I am not saying it is a good way to decide. Just a good way to understand what would disappoint you.
You are in a great position. You have some cool choices. Take some time to get to the bottom of what is motivating you. The 100 door goal might be driven by external forces which have nothing to do with what you personally want. Or, just the opposite.
Happy to continue the discussion. The answer has to be right for you.
Lender · Los Angeles, CA · Member since 2019 · 19 posts · 5 votes
7y
With the right investment you can use the cash flow to pay off your home and get the apartment payments paid for at same time. Because you would be taking out equity as opposed to refinancing you’d still owe same amount on your home. Once that’s paid off you would be generating pure income. If it’s a great investment it’s usually worth it. Just my opinion though
Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
7y
@Manuel Scott it all depends on your goals. You can definitely get a better return on the equity investing in commercial or multi family then you can leaving it in your home. If you buy value add properties you can refi and deploy the equity back into other properties once you increase the value and continue to grow.
You could also use that cash to flip, build spec houses or do a small development project and multiply it much quicker than you can buying cashflow properties. You can easily double the $400k in a year flipping and developing
London · Member since 2019 · 722 posts · 386 votes
7y
Manuel, I think you have conflicting goals. That said, it could be how you are framing the question.
If you are good at operating the properties you have so far, can you bring in other investors for future deals (using a legal process)?
Do you enjoy the day job?
If you flipped a coin, would you rather have 100 units (heads) or a home that is paid off (tails)? I find that flipping a coin can help you get in touch with your emotional preference. I am not saying it is a good way to decide. Just a good way to understand what would disappoint you.
You are in a great position. You have some cool choices. Take some time to get to the bottom of what is motivating you. The 100 door goal might be driven by external forces which have nothing to do with what you personally want. Or, just the opposite.
Happy to continue the discussion. The answer has to be right for you.
Investor · Memphis, TN · Member since 2013 · 741 posts · 845 votes
7y
I am in this exact same boat! I have about 500k in equity in my single family portfolio and I have been going back and forth in my mind whether to pull that equity out and start buying bigger deals. I guess for me I have decided to try to use less of my own cash and pool investor funds together to take on bigger deals. For now, I’m leaving the equity in place! This may of course change in the future but that’s where I am now!