Thoughts: Sell Rental Property for Acquisition?

searcher profile

March 11, 2025

by a searcher from University of Central Florida in Orlando, FL, USA

Hi all,
What are some thoughts on selling a rental property to provide some liquidity for acquisition purchase?
I will do best to keep it short - I'm a non-traditional searcher looking to go the ETA route. Rental property is financed at 3% rate (pretty low), and I cashflows a few hundred a month. But... I have about $200k in equity, meaning that after fees, I could clear ~$150k to put towards my first deal.
My thoughts are that while people say to never sell RE, I could leverage that equity into something that should produce a higher yield, with additional sweat equity. Obviously ETA is way more active than RE, but I'm looking to scale in the next few years via ETA.

No wrong answers, but a re-fi doesn't make sense with rates.

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
One thing to keep in mind based on the deal sizes you are looking at is if you are planning to use SBA financing and you end up buying a business with a lot of goodwill value, that an SBA lender is likely going to require outside collateral. Since you have equity in the investment property that means they would likely put a second mortgage on that property. So you would in essence end up with the equity you have in that property tied up into the loan anyway. By having the cash available to you, you could then put that into the deal and have a lower loan, or if you have the cash to put down separately, still have access to the cash from that property for use in growing the business or for a rainy day.

I would be happy to talk options at any time. You can reach me here or directly at redacted
commentor profile
Reply by a searcher
from University of Central Florida in Orlando, FL, USA
Makes sense - I'll be searching for deals around $1-1.5M purchase price - and I'd have about 10% of that available by end of year. That being said, if I dont sell the property, I could leverage the HELOC I have available - but less than ideal. I'm in the beginning stages of search, so not in a rush right now
The reason I'm considering a sale right now is due to the fact that tenants are moving out EOM, leaving me with an opportunity for an easier sale
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