Should I do a Cash out Refi?

[Jasmin Corral]

I am debating doing a Cash Out Refi on one of my Rental Properties. Even after pulling out 150-200k The Rent would still cover the mortgage + 500-600 more. Since rates are so low, I'm thinking I could leverage this opportunity to purchase another income producing rental. I only ow 310k on rental, current value 850, New balance would be around 510. Is this a solid strategy?

[Greg Scott]

To answer the question, YES!

You are clearly in an expensive area.  I'd consider transitioning to a location where you can buy several properties with that $150K and they all cash flow.  That would greatly reduce your risk and add to your potential upside. 

Once you have a foothold in a less-expensive market you will start to understand that the expensive market is killing your returns.  You could take the equity you have and triple or quadruple your cash flow while also improving your opportunity to benefit from appreciation because you own much more real estate.