Inherited $40k. Now what?

[Nathaniel Donnelly]

Greetings! I will be inheriting about $40k on October 1st. My girlfriend and I already own three properties, two of which are being rented out already, and aside from the mortgages, we are debt free. We have about $200k in equity on the three properties. What advice do you have for us regarding the investing possibilities in San Diego for that $40k? Thank you in advance!

[Account Closed]

Nathan,

$40k doesn't go very far in San Diego. The experienced investors would likely invest in notes or tax liens because they give the highest yields.

If it were me, I would pay down the mortgage of your primary residence. Assume it has a 4% mortgage rate. That means you earn 4% yield instantly while you're waiting to figure what to do with that money. You then go to a credit union and open a $40k HELOC at 1.99% - 3.5%. Some banks/credit unions will go as high as 90%-95% LTV on your primary residence so you might be able to borrow more.

Once you figured out what to do with the money, use the HELOC. Be sure you will qualify for the HELOC prior to paying down the 1st mortgage on your primary residence. Hope that makes sense to you.