What would you do 133k heloc 50k cash
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Randall AlanPro Member
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votesPart of your answer depends on what the rate on your heloc looks like. Presuming it is in the high 6's to 7's, much of your normal profit from using those funds will end up in the bank's "interest column" on your REI spreadsheet. With that said, part of my advice to you is that it is ok to sit still when there is no good deal to be had. So always keep that in mind. I'm a local investor and unless I can find a deal that cash flows you won't see me buying just to be buying something (ie. Just for appreciation). It's smarter to wait for a good deal to come along at a good interest rate, then to tie yourself up with a property that has expensive financing and cash flows less.
I currently have my cash sitting in a high-yield savings account earning close to 5% apy (safe, happy, and ready). CDs are paying better than that, but obviously your money is tied up in the event that something good comes along, so I prefer the high-yield savings account so I have access to the money at a moments notice.
If remote investing is your thing, there is a blog post here on bigger pockets that talks about the four market areas that are still cash flowing:
https://www.biggerpockets.com/...
I was researching a multi-family today where the fact it was a triplex made a big difference on cashflow over a sfh or duplex… so you might look towards that end to offset the higher cost of borrowed money. Also, sort of obviously (perhaps), the bigger the part of your deal the (interest free) $50,000 can play, the better… Which translates to “the cheaper the home you can buy, the better your numbers will look when you pay your balance down by the $50,000.”
“Patience is a virtue” As they say, so I will encourage you to be patient and wait on the market to settle a little bit (Unless you find a deal that cash flows at a rate that makes sense to you). This may mean sitting idle for a year, but when you figure the cost of having to refinance out of an expensive mortgage, it actually makes more sense to wait than it does to go ahead and buy with a high interest loan when I run the numbers.)
Hope it helps,
Randy
8 Replies
- 3yRandall AlanPro MemberInvestor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
Part of your answer depends on what the rate on your heloc looks like. Presuming it is in the high 6's to 7's, much of your normal profit from using those funds will end up in the bank's "interest column" on your REI spreadsheet. With that said, part of my advice to you is that it is ok to sit still when there is no good deal to be had. So always keep that in mind. I'm a local investor and unless I can find a deal that cash flows you won't see me buying just to be buying something (ie. Just for appreciation). It's smarter to wait for a good deal to come along at a good interest rate, then to tie yourself up with a property that has expensive financing and cash flows less.
I currently have my cash sitting in a high-yield savings account earning close to 5% apy (safe, happy, and ready). CDs are paying better than that, but obviously your money is tied up in the event that something good comes along, so I prefer the high-yield savings account so I have access to the money at a moments notice.
If remote investing is your thing, there is a blog post here on bigger pockets that talks about the four market areas that are still cash flowing:
https://www.biggerpockets.com/...
I was researching a multi-family today where the fact it was a triplex made a big difference on cashflow over a sfh or duplex… so you might look towards that end to offset the higher cost of borrowed money. Also, sort of obviously (perhaps), the bigger the part of your deal the (interest free) $50,000 can play, the better… Which translates to “the cheaper the home you can buy, the better your numbers will look when you pay your balance down by the $50,000.”
“Patience is a virtue” As they say, so I will encourage you to be patient and wait on the market to settle a little bit (Unless you find a deal that cash flows at a rate that makes sense to you). This may mean sitting idle for a year, but when you figure the cost of having to refinance out of an expensive mortgage, it actually makes more sense to wait than it does to go ahead and buy with a high interest loan when I run the numbers.)
Hope it helps,
Randy
- 3yJimmy LieuBusiness MemberReal Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
Quote from @Gary Love:
We have a duplex that cash flows about $1600 in the Columbus, OH area. We have 133k Heloc available and 50k cash. For the more experienced investors what would you do if you were in our situation? Looking for more long term hold but open to suggestions. Just want to make this money make a difference for our future and retirement in about 15 years or so. We appreciate any and all advice. Thank you. Have a great weekend!!!
Hi Gary, I would use the 133k HELOC and 50k cash to do BRRRRs and flips, essentially recycling your capital as much as possible and building out your portfolio in the meantime. Also, by doing it here in Columbus Ohio where there's tons of appreciation and cash flow, it's a great market to be BRRRRing and flipping!! As a local investor and agent here in Columbus Ohio, let me know if you have any questions or need help with anything Gary!! :)
Jimmy Lieu, Red 1 Realty4.9120 Reviews - Real Estate Agent · Columbus | Toledo · Member since 2019 · 607 posts · 768 votes3y
Quote from @Gary Love:
We have a duplex that cash flows about $1600 in the Columbus, OH area. We have 133k Heloc available and 50k cash. For the more experienced investors what would you do if you were in our situation? Looking for more long term hold but open to suggestions. Just want to make this money make a difference for our future and retirement in about 15 years or so. We appreciate any and all advice. Thank you. Have a great weekend!!!
Repeat! Great job having a duplex with great cashflow.
You should be receiving and analyzing deals frequently to find the next one.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes3y
Quote from @Gary Love:
We have a duplex that cash flows about $1600 in the Columbus, OH area. We have 133k Heloc available and 50k cash. For the more experienced investors what would you do if you were in our situation? Looking for more long term hold but open to suggestions. Just want to make this money make a difference for our future and retirement in about 15 years or so. We appreciate any and all advice. Thank you. Have a great weekend!!!
Buy another duplex for about 110k, with about 1700- 2k a month in rent,
- Columbus, OH · Member since 2023 · 427 posts · 254 votes3y
If you're seeing success here in Columbus, I would keep at it! MFH do well here, and in 15 years Columbus will continue appreciating, and you will have built significant equity on top of that cash flow. Keep looking, as MFH inventory is rather low.
- 3yMatthew CrivelliBusiness MemberLender · MA · Member since 2021 · 1k+ posts · 1k+ votes
I would be looking to use the HELOC money for short term situations ONLY. Buy properties that need to be fixed up, build in equity, refinance into a long-term loan using the newly appraised value OR SELL. I would NOT be locking up HELOC money into long-term rental loans that have midterm prepayment penalties, that could be a recipe for disaster.
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