Equity isn't great for cash flow while you are giving free shelter to your squatter and his family. But it can help you get you that cash-out refi you'll need to pay for the remodel after it got trashed

> You're forgetting that you're increasing your equity.

Only if the house's value doesn't go down. Like if the house needs to be torn down because it's been destroyed by a flood, the market crashes, or the major employers in the area leave.