Take the equity or reinvest?

5 Replies

I've done some buy and hold investing the past 5 years or so. I've had the benefit of the market on my side so the 3 properties i've owned have appreciated nicely since then. I sold one, live in one currently, and still own one investment property. I'm thinking of selling the investment property and taking the equity later this Fall.

If i sold this property i'd keep the one i live in but have a nice chunk of change to reinvest somewhere (likely the midwest). If i go this route, my math tells me i can make close to enough to live on and work optionally if i rent out my current house, so that would free me up to travel and such.

I'm 30 years old and don't want to work my whole life, but i also don't want to be bored. I don't think i'd bring in enough to truly "retire" (health insurance etc). Any advice (maybe some of you with more life experience than me), would you take the equity while it is there or would you hold the property that has been appreciating very nicely year over year?

Keep the line moving forward.  You can make more money by investing the cash from your equity than you will gain through continued appreciation.  If you refinance your equity out instead, and invest that, you can also retain the original property and also retain any appreciation off of it....kind of the best of both worlds.

Jeremy, First of congrats on your situation. Most would enjoy your dilemma.
There is a philosophy that if you are not moving forward you are slowly dying. Take the lessons you have learned so far and implement them to further secure your future.


Congrats on your 'dilemma'!  This is a good problem to have.  With that said, it's hard to give you advice without knowing the full picture...is the investment property cash flowing?  How much?  Enough to still sufficiently cash flow if you refi the equity out?  I agree with Joe Villenueve but only if your numbers work and you are still cash flowing after the refi.

For health insurance, there are some options out there for you if you elect to leave your 9-to-5 job.  Health Savings Accounts (HSAs) seem like an interesting option, especially if you are young and healthy.  They earn returns on the funds you don't use each year (unlike a insurance policy where the unused money goes away)...you'd have to do some of your own research though as that is about all I know about them.  You could also join the National Guard or Navy Reserves (or Army if you prefer)...they both offer afffordable health care (Tricare Reseerve for Navy) and the service committments are part-time (one weekend a month) which might still allow you the freedom you are looking for.   

Best of luck!

@Jeremy Clarke Two options that come to mind that would allow you to do what Joe said and keep your existing properties and potentially still buy new ones are a cash out refi and a HELOC. Without more info, it's hard to know which option would be better in your situation. Both have their pros/cons, but either would allow you to access the equity in your current properties and pull money out to acquire new ones.

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