Use equity in my home to pay down my home or invest in a rental?

7 Replies

I have a home in Southern California that I bought for $225k. It has appreciated around $290k in the two years I have lived here. I would really like to purchase a rental using a Heloc strategy, but I'm not sure if it's a good time to invest my equity or if I should use it to help pay down my home value over time. Any suggestions?

You can't use equity in your home to pay down your home because you are borrowing against your home to take equity out.  So of the two only one is possible.

Whatever you do, don't pull equity from that prime La Quinta property to invest in C or D class property in the Midwest. I would even be cautious with properties labeled as B class from the folks trying to sell you the property. Do your research, take your time, define your goals. There is no rush....... much better to do nothing than to make a mistake. Also, realize that CA newbies and their "what should I do with my money" mentality can be somewhat of a target here. If you buy turnkey, just know what you're getting into. 

@Tony Kim Thanks Tony, I'm in no rush. I'm more or less weighing my options. La Quinta has been growing quite a bit and I walked into a pretty good deal without knowing it. I'd like to try and start generating income with the equity I have, but paying down my principal and walking away with a paid off property in this area sounds pretty good too.