Are you pulling your equity now?

Question

Is now the time to get your equity out of your properties and pool your cash.  I’ve never been one to be comfortable being highly leveraged, but from what I’m hearing, property values are going to be dropping, much like the rest of the economy.  I’d hate to lose that equity and like the opportunity to put that cash to work elsewhere.  What are you doing?

Account Closed · Answer

@Eric Armstrong

Yes, I am. But it has nothing to do with this pandemic, in is really just part of my overall strategy of recycling my money to grow.

Scott Passman · Answer

@Eric Armstrong Run the numbers on your properties and see what makes sense.  If you can pull out some equity to hold in cash reserves or to use as capital for additional investment opportunities and your properties would still cash flow then it could certainly make sense.  However, don't pull out equity for predictions that may or may not happen if you're going to put yourself into a negative cashflow situation or overleverage yourself into a risky position.  I think this is what @Joe Villeneuve is alluding to.  Look at the numbers for each property and do it if it makes sense financially, not based on what you think the impact of the virus will be.

Alex Olson · Answer

It depends on your current leverage. I think that if you plan is to grow, cash our refi to a degree so that you can buy additional property. But if you are pulling it out to put a pool in your backyard might not be a good idea. Hope that helps!

Joe Villeneuve · Answer

Pulling out equity the way you speak is based on the property...not the virus

Anthony Wick · Answer

I'm doing several cash out refinances right now. But it's more about current interest rates than it is about the Covid, or the economic times we are in. I plan on keeping these properties for a while, and interest rates are ridiculously low, which will allow me to pull out some cash and still lower my mortgage totals.

Joe Villeneuve · Answer

100% correct.

Joe Villeneuve · Answer

You are basing your panic, knee jerk reaction, on a temporary economic situation.  This economic downturn is based on a temporary medical problem...not an economic problem.  When the medical problem goes away, and it will, you will have a pent up demand that will catapult the economy, and the property values along with them, right back where they were before the virus hit.

Eric Armstrong · Answer

@Joe Villeneuve my thought is the virus will lead the domino effect that causes home values to drop.

Are you pulling your equity now?

Most Popular Reply