Cash out on Rental house

[jimgreener]

I have a rental house in NY and I have paid off my mortgage...The house is worth 500K.
My question is can I or should I take cash-out.
The reason for the cash out is this...a long story...We bought the house in June 2010 and paid it off in Oct 2010...However, now we have almost no savings...(2-3K). Our income is around 10K per month and expense of around 6K.

Since we have no savings for the rainy day.

Any thoughts?

[jIM_Ohio]

Focus on spending patterns before looking to boost savings. The worst thing you can do is cash out and see the money spent on stuff which does not improve your net worth.

[disneysteve]

We bought the house in June 2010 and paid it off in Oct 2010...However, now we have almost no savings...(2-3K). Our income is around 10K per month and expense of around 6K.

Why did you pay the house off immediately if you had no other savings?

I would not borrow against the home to fund your emergency savings. That makes no sense.

Your monthly expenses are 4K less than your income so you've got plenty of money coming in to build your savings. In 4 months, you'll have a 3-month emergency fund. Tighten your belt a bit and you could do it even faster, not that 4 months is all that long. Definitely don't borrow against the house.

[cjscully]

I have a rental house in NY and I have paid off my mortgage...The house is worth 500K.
My question is can I or should I take cash-out.
The reason for the cash out is this...a long story...We bought the house in June 2010 and paid it off in Oct 2010...However, now we have almost no savings...(2-3K). Our income is around 10K per month and expense of around 6K.

Since we have no savings for the rainy day.

Any thoughts?

Don't borrow against the rental. With these numbers you can put 6 months worth of expenses into an emergency fund within 9 months. There's no reason to borrow.

[snafu]

What change do you anticipate that would need an immediate, major cash expenditure? Is your income threatened? Have you established a line of credit? Why not make a 6 month goal establishing an emergency fund? Make Christmas a season to do things, enjoy all the free/inexpensive programs your community offers? Volunteer to help those less fortunate to have enough to eat and warm clothes! Decree that all gifts are to be home made, not spendy etc. Work together to winterize your home if you live in the snow belt etc. Challenge everyone to be frugal and cut spending by an agreed percentage etc.