What to do with $3 million in equity

[Michael Gonda]

Hi everyone

My business partner and I have 25 - 30 single-family homes and multi-tenant properties.  

-  All of the homes/properties have been renovated and have been in service for a number of years (meaning we have a strong history as successful  property owners/investors)

-  All of the homes are higher-end rentals in very good neighborhoods 

- All but 4 homes are completely paid off with no mortgage overhead or LOC debt

-  All homes have a very consistent rental history with very low vacancy

-  All homes are turning a profit and our pre-door numbers are very good

Because the homes are almost completely paid off, we have a good deal of equity in just sitting around.  We would prefer not to sell anything off at this time and plan on owning these properties for a few more decades (although we have considered selling some for various reasons). 

A rough back-of-the-napkin calculation yields about $3.2 million in available equity across the entire portfolio.  

Q1.  What would you do with that equity?  

Q2.  How would we go about getting cash from the equity?

Q3.  With interest rates as they are, and knowing they are probably going to start dropping over the next few quarters, is it best to wait on any kind of finance for a year'ish or are the rates not going to come down enough over that period to make a huge difference?

Thoughts? 

Thanks in advance

[Joe Villeneuve]

Quote from @Daniel D Huffmaster:

Quote from @Joe Villeneuve:

If you don't want to sell the properties, then sell the equity.  Take on cash (silent,...VERY silent) partners.  They buy in and get part of the cash flow, you get the cash.

The alternative, and the best one at this point, is to refi.  The cash you get coming out isn't income, it's a loan, so you have very favorable (non-existent) tax issues.  If the properties can handle (as in still have positive CF) a 15 year mortgage, do that...and refi 2 properties every year.  This way, you get that Freelike cash every year on 2 houses at a time, every year for 15 years. Then, since year 16 will have payoffs of the first pair of properties, you start the rotation all over again.

Joe, 
Your a genius, I'm so glad I read this post. I've been trying to figure out how to retire and still leave everything for my boys. Been praying about this for over a year. I was looking at selling a few properties and moving that into syndication or lending the funds. But it all seems a little risky. I have 12 rentals and most of them have massive equity. Thought about using that equity to buy a larger apartment complex but from what I've seen most of them in my price range <3m barely service the debt. 
But, doing a cashout refi on 1 property per year gives me about 10k per month for at least 12 years. I'm coining this strategy as CORR, Cash Out Refi Retire. 
Im sure there are many people doing this, ive just never heard of it. I probably cant do the 15 year refi and i do see how that is super beneficial when you restart with the 1st property again, ill call that recycle. Ill retire in just a few months with CORR. Lol
thank you Joe
 

I've already coined all of these things, and more.  Others have done these things.  I like to think I've perfected them in a way where it's all part of a system, rather than a separate knee reaction.  It works better that way.

[Billy Smith]

Ben Mallah in Florida has been doing this strategy of getting commercial loans  to live on or deploy the capital how ever he wants .  He has a You Tube channel it's  fun to watch for a while .