What would you do with $200k equity in a rental property? Getting back in the game

Question

Not asking to be spoon-fed, just looking for some back and forth about what more experienced investors would do in my situation, as well as what my own plan is:

Background Info:

• Familiar with real estate investing and the niche strategies
• 
• I’ve been focusing on career goals for the last decade so I’ve been out of the loop for a while
• 
• I own two rentals; one has about easily $200k equity, the other has less and is one I’d rather keep for now
• 
• I have about $300k liquid in stocks
• About $70k in my retirement fund of which I can maybe pull out $20-30k
• 
• Tens of thousands of dollars available on credit cards and lines of credit

Purpose of this post is to see what those who are up to speed with the current strategies and market would do in my situation.

Right now I’m thinking about performing a 1031 exchange on the $200k equity property and rolling that into a BRRRR property, using my existing credit lines to fund the rehab. It’ll be my first one and I expect to make mistakes and possibly a return that won’t be as good as the subsequent properties; not a big deal, just need to get the reps in.

It seems like raising cash to fund rehabs isn’t necessary due to my credit available, so there’s no need for hard money.

So, with all of this outlined, what strategies would you guys employ? I’m not interested in AirBnB due to the high effort involved. Was planning to purchase my first commercial property but at this point it seems like a better idea to learn how to do rehabs and build that portfolio.

Igor Ganapolsky · Answer

I come at this from a different angle since I buy at tax deed auctions in Broward County FL. The properties I pick up typically sell at 50 to 70 percent of assessed value, so equity is built on day one through the acquisition discount rather than through a BRRRR cycle.

That said, your situation is interesting because you already have the equity sitting there working for you. The question is really about risk tolerance and how many moving parts you want to manage at once.

A few thoughts from someone who has been in the trenches recently:

First, be very careful about using credit cards for rehab funding. The interest will eat your margin alive if the project takes longer than expected. And rehabs almost always take longer than expected. If you have $300k in stocks, pulling some of that out for a cash rehab might actually be cheaper than carrying credit card debt for 6 to 9 months.

Second, the 1031 timeline is tight. You have 45 days to identify and 180 days to close. If you are doing your first BRRRR and expect to learn along the way, make sure your replacement property is something you could also hold as a rental if the refinance does not work out. Do not get forced into a bad purchase just because the clock is ticking.

Third, consider whether the 1031 is even necessary here. If you sell the $200k equity property, you will owe capital gains plus depreciation recapture. But if that property is already cash flowing well and you just want more doors, a cash-out refi might give you the rehab capital without triggering a taxable event. You keep the property, you get the cash, and you avoid the 1031 complexity entirely.

The BRRRR strategy is solid but it is operationally heavy. You are basically taking on a part-time construction management role on top of being a landlord. Make sure you have the bandwidth for it, especially if you are getting back into this after a decade away from the market.

Ashish Acharya · Answer

Demitri, with roughly $200K of equity in one rental plus significant liquidity outside the property, I’d look at this as a capital-allocation decision before automatically selling and forcing the money into a BRRRR.

A 1031 into another investment property can be a strong option if the current rental has appreciated and you want to defer the gain and depreciation recapture, but I’d make sure the replacement property works on its own first. The 1031 should improve the tax efficiency of a good move, not push you into a deal just because the identification clock is running.

For the BRRRR itself, I’d work backward from the refinance. Conservative ARV, realistic post-rehab rent, rehab contingency, carrying costs, refinance LTV, and what happens if the appraisal comes in 10%–15% lower should all be modeled before closing.

I’d also be cautious about using large amounts of credit-card or unsecured line-of-credit debt for the rehab simply because it’s available. If the rehab runs long or the refinance comes in light, high-cost revolving debt can turn a good project into a liquidity problem pretty quickly.

From the tax side, if you successfully move from one rental into another qualifying investment property through a 1031, the deferred gain generally carries into the replacement property rather than disappearing. Once the new rental is placed in service, depreciation and potentially cost segregation become part of the next layer of planning.

I’ve personally done 20 BRRRRs, including a method I call “BRRRR on steroids,” where you structure the financing so you can act more like your own lender. There are ways to make the capital stack more efficient, but the refinance and tax plan need to be mapped out before the rehab starts.

With your liquidity, I’d probably protect reserves and avoid touching retirement funds unless there’s a very compelling reason.

Feel free to DM me, I’d be happy to send over a few resources that might help you compare the 1031, BRRRR, and hold options.

Rudy Taghi · Answer

Personally, I’d first decide what matters most right now — more cash flow, more doors, or keeping flexibility and liquidity.

I’d also be careful about moving a large amount of equity just because it’s available. Sometimes the best move is the one that gives you the strongest return without tying up too much cash, in my opinion.

Remington Lyman · Answer

If the property is not in a great location, now is a good time to 1031. I have done 3 so far this year

Arman Ahmed · Answer

With your experience and the amount of equity/liquidity you have, I’d probably focus on getting the first BRRRR done well rather than jumping into commercial right away. If you’re open to investing outside Omaha, I’d also compare the numbers in the Midwest, especially Ohio. There are still markets where you can buy below value, force appreciation through a rehab, and build a rental portfolio without relying on STRs. The first one is really about getting the process down so the next few become repeatable.

Gregory Acs · Answer

You've got a lot of flexibility, which is a great position to be in. Before deciding on a 1031 or a BRRRR, I'd work backwards from your end goal. If it's long-term cash flow and portfolio growth, compare how each strategy affects your liquidity, financing, and ability to scale. Sometimes keeping more cash available for future opportunities is more valuable than maximizing leverage on a single deal.

I'd also be careful about relying too heavily on credit lines for rehab costs. Having a backup plan if the rehab takes longer or the refinance comes in lower than expected can save a lot of stress. If you'd like to compare a few financing scenarios or talk through which strategy might fit your goals best, I'd be happy to help.

Caleb Brown · Answer

I'd consider doing a 1031 and roll it into a small multi family (10 units and below). A BRRR is not a bad idea either. Both can work, BRRR is more moving parts and increased risk but feasible.

Lipa F. · Answer

Why not just buying a few turkey long term rentals with 20% down?

Demitri M. · Answer

That’s a good option; I’ll have to do the math, but I want to learn how to raise cash via rehabbing. Depending on the numbers I may be able to pick up a rehab project and then use the remainder for rentals, since only a certain amount of capital is needed for acquisition/rehab

What would you do with $200k equity in a rental property? Getting back in the game

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