Sell or Refi and cash out?

I recently purchased a house for 48k that appraissed for 98k. The initial plan was to flip it as soon as possible for a target return of 25-30k to use as capital for other purchases. I have not marketed the house but have shown it too a couple of other investors. The 1st offer came in at 70k, but the second came in at 79k, not bad!!
After thinking about it a while I figured after closing costs and taxes, I might clear around 20k unless I do a 1031. On the other hand I thought I might be able to refi and cash out 20k tax free and rent it out for $800.00 a month which it will bring and hang on to the rest of the equity for a while and enjoy the tax deductions.
My question is, should I just sell it and be done or option B and refi. Any thoughts and ideas will be appreciated.

I would get a no closing cost line of credit on the property and then put it on the market for full price.

Either strategy will obviously work for profit. It depends on what your long term investment strategy is…there are pros and cons to both!


Would agree with Keith, really depends on what you are going to do with the funds if you cash out or sell.

If you intend to buy another property, and be done with this one, then a 1031 exchange is pretty easy to do…

If you don’t need your initial investment capital, and want to hold on… a cash out refi does pretty much the same thing…

Also, if you do cash out, and still are considering selling… verify the prepayment penalty on the loan. Most lenders have a min 6 month holding period on even a 30 yr fixed… but, some lenders have relaxed this requirement, which covers you in case you refi… then decide to sell…

Really no right or wrong thing to do here…

Thanks for the replies guys, I think I made a good decision. I put the house up for rent on the 12th and rented it the next day for 750 which gives me around 200 + cash flow after refinancing and cashing out around 21000 and sill keeping another 25000 in equity for later use.
Most of this cash out will be used as capital but as my primary business, some will be used to live on as well.
Thanks again

that’s a great find. How did you come up on that one? Was the property in good condition when you purchsased?

I actually picked this one up at my first forclosure auction. I went just to get the experience to see how they worked and was advised by several not to bid on anything I didnt research. This one came up and for some reason no one opened bid on it including the bank which usually gets about 95% of all of them. I took a pretty big risk and put in a bid after i realized where it was located and knew the approximate value. I won the bid then hauled butt to the house to see what i got and lucked out. :smiley: