HELOC vs Liquidating Portfolio?!

21 Replies

So my last post on BP, I was asking for advice purchasing a very old rental in a D area.. Since then, I've saved some cash and reevaluated.  I've found a really clean triplex 1 city over, more then I wanted to spend but pretty turnkey as far as maint/and the property goes.  

My question for you all.. being a income property, I need 100k down. I've got the cash between a stock & crypto portfolio and now is not a great time to sell due to the current run up of both. I'm wondering people opinions on doing a HELOC vs selling assets that are gaining value. What would you guys do?

Also, major part of this.. TAXES.  Selling everything would lead to Uncle Sam adding over 100k to my annual income and therefore tax me quite a bit for it.. give me some ideas! Thanks

D neighborhood puts me off of the current holdings. Cash flow might be there, but problems also arise, maintenance would be higher in older buildings, tenants are often not as stable financially. In the same situation I would 1031 exchange, followed by HELOC.

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And a HELOC adjusts, so while the payment is low right now, it will go up. It is a short term tool.

@Zach Jones , that's true, you will need to have cash flow from your new property to pay back the LOC. I prefer the LOC because it sits dormant until you need the money quickly. Of course, if you are planning to do a 1031, now is the time, in light of the legislation that might get passed outlawing 1031s.

@Benjamin Aaker sorry couldn't figure out the app to sign back in to reply, lol. Rates would not adjust. Fixed rate. After playing with options, a cash out refi made the most sense (Heloc rate was mid 4s), because I can get a 2.37 rate (2.6 currently) and have my mortgage move by about 500ish dollars.. I'm unfamiliar with the 1031 but will gain some knowledge here shortly. It seems like most would lean toward keeping those assets gaining value and finance the cash down?

I have heard that it's possible to get a loan at a good interest rate using your crypto and stocks as collateral. I don't know who provides those loans, but it might be good to look into.

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Originally posted by @Benjamin Aaker :

If your triplex property is cash-flowing, go with the HELOC. A 1031 will help defer taxes, but you will lose the income source on your triplex

Just rereading your responses..When you say that I'll lose the income source, do you mean I'll lose it in the form of the HELOC payments or I somehow won't receive the income with the 1031?

@Zach Jones

You may want to see if it makes sense to create a QOF to invest in the property.

There are some considerations for this to work - Is the triplex in a QOZ(qualified Opportunity Zone) and are there significant repairs that need to be done to the house.

If you were to sell the Stock / Crypto - are the assets atleast long-term where you benefit from reduced tax rates?

Best of luck

I like the idea of the HELOC or cash out since rates are so low right now. Yes your monthly payment will go up but I'd get as many loans as you're comfortable with right now while rates are low. You'll have a resident paying your note off while values around you increase and rents will eventually increase to help pay off your notes quicker. Now as far as the area goes that definitely depends on your risk tolerance. I personally will give up some of the monthly cash flow for a better area, which is normally more expensive, but provides a better resident and typically more consistent appreciation. My .02 cents but good luck with the decision and investment!

From my understanding, HELOC's lost demand due to COVID because lenders started demanding payoffs overnight -- at least on the private/non-qm side.

If you're offered a great rate, cash-out the equity.