What would you do?

[Vasudev Kirs]

I own two condos - one being used as my primary and the other which is an investment property currently rented. Both of these condos are paid off. I am being paid lumpsum by my tenant and I am out of clues as to what I should be doing with the 1.5 years of rental income that I accumulated. I am interested in buying a small single family house but don't know how to finance. Based on reading here, I sort of know that I need to take cash-out refinance and use that as a down payment for my future purchase. or do I need to use HELOC? I probably have more than I need for my down payment towards single family if i do a cash-out refi. Do I need to buy a bigger property if I have more than 20% down payment for a single family house like maybe a multi-family?

help me! do you have any other ideas?

[Melissa Justice]

@Vasudev Kirs,

You’re in a fantastic position - no debt on either condo, solid rental income coming in, and now a pile of cash sitting idle. That’s a great problem to have! A few thoughts to help you map out the next steps:

1. Clarify Your Goal First
Are you aiming for cash flow (monthly income)?
Long-term appreciation/equity growth?
Or building a scalable portfolio over time?

Your financing and property choice will look different depending on which matters most.

2. Cash-Out Refi vs. HELOC
Cash-Out Refinance: Gives you a lump sum upfront.
You’ll have a new mortgage payment on the condo.
Best if you want a big chunk of capital right away and plan to buy multiple properties.

HELOC:
Works like a credit line - you borrow only what you need, when you need it.
Payments are interest-only (at least initially).
Best if you’re buying one property now and want flexibility later.

Since you already have rental income and low expenses, a HELOC might be the more flexible move, especially with rates still elevated. You can pull only what you need for a down payment and keep the rest untouched.

3. Down Payment Strategy
You don’t have to put more than 20–25% down unless it makes sense for the numbers.
Extra down payment = lower loan balance = lower monthly payment, but it also ties up capital you could use for more deals.
Often, it’s better to leverage (use financing) and spread your capital across multiple properties.

4. SFR vs. Multifamily
SFR (single-family rentals): Lower maintenance, easier to manage remotely, larger pool of buyers if you ever want to sell. Great for turnkey long-term investing.

Small Multifamily: Better cash flow potential, economies of scale (one roof, multiple rents). But management and tenant turnover can be a little trickier.

Since you already have condo rental experience, a small SFR in a stable market might be the easiest next step. Once you’re comfortable, you can scale into small multifamily.

5. Other Ideas
If your condos are in appreciating areas, you could also consider a 1031 exchange down the line - selling one and rolling those gains tax-free into a bigger, cash-flowing property.

Look into turnkey SFRs in the Midwest/Southeast where $30–50K down can get you into solid cash-flowing rentals with professional management already in place.

Bottom line:
Use a HELOC for flexibility unless you want a lump sum for multiple deals (cash-out refi).
Don’t sink too much cash into one property- leverage smartly.
Consider SFRs in strong cash-flow markets first, then expand into multifamily later.

Always happy to share more on what markets are working for other investors. Best of luck!