Refi or Sell to get the most cash out?

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Refi or Sell to get the most cash out?

Joel C.
Austin, TX · Member since 2008 · 21 posts · 4 votes

Hello,

I have several rental properties I'm thinking of liquidating to move the cash into other assets. But, I'm going back and forth on whether it's better to sell or refi. In my area I think real estate has gotten way overpriced and I anticipate the market to reverse downward, which is one reason I'm looking to sell and get out of real estate for a short time, to then buy back at lower prices. Here is my portfolio. I'd love some feedback and guidance.

Property 1 (Duplex): Value = $550k, Debt = $150k, Cashflow = $1150/m
Property 2 (SFR): Value = $200k, Debt = $61k, Cashflow = $483/m
Property 3 (SFR): Value = $111k, Debt = $0, Cashflow = $1000/m
Property 4 (SFR - Personal Residence): Value = $473k, Debt = $159k, Cashflow = $0
Property 5 (SFR): Value = $142k, Debt = $112k, Cashflow = $285/m
Property 6 (SFR): Value = $144k, Debt = $103k, Cashflow = $434/m

My goal is to get as much cash out so I can roll that into other asset classes. 

Thanks for your guidance and I won't consider it financial advice ;)

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Scott E.
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
4y

A wise man once said that time in the market beats timing the market.

With that being said, calculate exactly how much equity you think you could pull from all of these assets if you sell them all. Then calculate what your current cash on cash return is on that money today.

Then ask yourself if you think you can beat that return deploying the capital elsewhere.

(also, unless you are able to facilitate a successful 1031, you will be faced with a tax bill which needs to be considered)

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  • Scott E.
    Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
    4y

    A wise man once said that time in the market beats timing the market.

    With that being said, calculate exactly how much equity you think you could pull from all of these assets if you sell them all. Then calculate what your current cash on cash return is on that money today.

    Then ask yourself if you think you can beat that return deploying the capital elsewhere.

    (also, unless you are able to facilitate a successful 1031, you will be faced with a tax bill which needs to be considered)

    1Reply
  • Alicia MarksPro Member
    Fort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
    4y

    I would look at how to refi with decent cashflow that allows you to use the equity elsewhere. Those properties and rents will continue to grow as well as hopefully the new investment strategies you are using. You could also look to sell off your least performing or most frustrating tenants to improve your portfolio and use the proceeds elsewhere.

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  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    4y

    @Joel C. I'm a fan of holding onto properties until you know exactly where you're going to put the money next. Let's say you sell off your entire portfolio right now and wait for a crash and it doesn't come for 5 years. You could potentially lose 25-35% of your capital to inflation if you assume the current trends will persist. I'd hold on.

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