Cash or Heloc???

Question

I have about 270k in ready cash including emergency fund. I am seeking advice on how to deploy. So, brief info to set the stage: I am 56, and own a small rv park, and several SFH/duplex that are all debt free. I have one duplex that is worth 265k, I owe 200k, paying 7.5% interest I have 29 years left at $1390/month payment. Personal home, I am paying 6.5% interest and owe $270k; (valued about $400k) 2 years into my 15 year loan, payments are $2580/month. I have 20k in a Roth in stocks or funds, 12k in a traditional ira in stocks and an additional 6k in stocks. I have about 60k in real estate debt funds, and another 20k in a passive fund. I am in the 12% tax bracket, since I dont itemize, that makes the house loan non deductable, the duplex loan is deductable, bringing the real world interest rate to 6.6% after taxes on the duplex. Most of my income is on schedule E, so very little is subject to Social security/Self Employment taxes. I am leaning toward acquiring more sfh at tax auctions, which requires cash on hand. I could payoff the duplex, or invest all cash in passive and active deals, or I could payoff the family home, and take out a heloc. For now, cash is in high interest savings acct a 3.4% What are my options for investing and/or debt pay down and tax strategy? , I dont need emergency cash on hand if I had a heloc. however, helocs are expensive, but I dont anticipate any auctions or expenses in the next couple months, so the interest savings on the loans may be worth it If the Heloc (or other loan products) are smaller amounts. My credit score is 800.

I am leaning toward using all cash to payoff family home and then have a heloc for emergencies and auctions. I am open to any other ideas or loan products, or refi's that make sense. So please tell me if you have any better ideas. Also, I would love to find private money to refinance the duplex with at 6%.(74% LTV)--how do I find that kind of person?

James Jones · Answer

You’re asking the right question, and the answer isn’t cash or HELOC, it’s liquidity management vs. interest arbitrage.

A few observations based on what you shared:

• At a 12% tax bracket, the psychological benefit of paying off the primary residence may outweigh the tax math, since that interest is effectively non-deductible anyway.

• However, paying off the house first and then relying on a HELOC introduces call risk. HELOCs are great until they’re frozen, reduced, or repriced right when opportunity shows up.

• Since tax auctions require speed + certainty, true cash still wins there. A HELOC is a backup, not a replacement for deployable capital.

• The duplex at 7.5% (≈6.6% after tax) is the least urgent problem in your stack. I wouldn’t rush to pay that off unless you’re de-risking for lifestyle reasons.

• From a flexibility standpoint, I’d personally avoid moving from cash → illiquid equity → variable-rate debt unless the HELOC is already open and unused.

A middle ground I’ve seen work well:

– Keep auction-ready cash

– Open a HELOC now while income and credit are clean

– Use excess cash selectively where the return clearly beats your cost of capital

– Treat HELOC funds as contingency or bridge capital, not core strategy

As for finding 6% private money at 74% LTV, that usually comes from existing relationships, not marketplaces. Long-term lenders price based on trust and track record, not the deal alone.

Strong position overall. At this stage, the real risk isn’t leverage, it’s losing optionality.

Andrew Postell · Answer

@Matt Williams thanks for posting. Always great to hear from a fellow Texan. I would encourage you to NOT pay off the primary home. I would encourage you to acquire properties from auction one at a time. Meaning, acquire one, complete the project, and then use your exit strategy, pay back your emergency fund, and then move to the next one. You just got both of those mortgages on your properties...paying them off now would seem counter-productive for me. If you never got a HELOC (or a cash out loan) on your primary home, you can still get a small one. I would also encourage you to have a small HELOC - just in case. But not really use it. You have this amount of money that isn't really collecting that much interest (which is fine) so let's use it on something that will give better returns. You are experienced enough that, while there's always risk, there's not too much risk using your money this way. And then you pay it back one deal at a time so you don't over extend yourself.

Hope this makes sense what I am saying but that's what I would suggest.

Hope this makes sense what I am saying but that's what I would suggest.

Sandy Hu · Answer

That makes sense — a tight radius usually helps with execution and local intel, especially on steps deals.

One thing I’ve seen work well in that setup is defining two buy boxes within the same radius:
• one optimized for speed/auction certainty, and
• a secondary box (MLS or light value-add) that still pencils but gives you flexibility if timing or seasoning slows things down.

Keeps capital moving without forcing a deal just to deploy it.

Sandy Hu · Answer

That’s a good point, especially in Texas.For post-auction SFHs, the title seasoning / resale seasoning rules can definitely be the bottleneck, even when the equity and rent look great on paper. I’ve seen a few ways investors work around this depending on lender and structure:

• using short-term bridge / DSCR lenders that allow refi off current appraised value after 6–12 months (often with stricter reserves),
• delaying the refi and keeping capital flexible via HELOC or other revolving credit,
• or pairing auctions with off-market / MLS deals so not all capital is trapped behind seasoning rules.

In practice, I’ve found the safest approach is exactly what you mentioned earlier — make sure the deal pencils conservatively before assuming a fast refi, especially in TX.

Are you mainly targeting courthouse steps or online auctions, or open to mixing in non-auction SFHs as well?

Sandy Hu · Answer

That makes sense — SFH is typically what shows up at auction.

If bridge capital is the plan, the biggest things I’ve seen matter with auction SFHs are:

• Rehab + hold timeline — making sure the bridge/HELOC runway comfortably covers rehab and seasoning before refi.
• Refi lender alignment upfront — some lenders get picky if the purchase was auction + rapid value jump, so confirming appraisal approach and seasoning rules ahead of time is key.
• Exit flexibility — having a backup (DSCR refi, partial cash-in, or longer-term bridge extension) in case rates or underwriting shift.

In practice, I’ve seen this work best when the numbers still pencil conservatively before assuming top-of-market refi value.

Are these in-state for you, or out-of-state auctions?

Bo Smith · Answer

Nice position to be in at 56 with that kind of cash! One thing I'd think about - maybe keep more of that liquidity available for the tax auctions instead of tying it up in loan payoffs first? Those auction deals move crazy fast and having cash ready beats trying to find financing when you spot a good one. How many properties are you realistically thinking you could grab per year at auctions with what you've got now?

Seth McGathey · Answer

Man, who are you asking? It sounds like you have more experience than most people, and it sounds like you are doing great! A couple things I would be interested in knowing is what are your goals? Expanding further or just safe steady returns? Because it sounds like you have what you need. I am assuming you are getting solid income from these properties. So unless you really are trying to still expand, I say play it safe and pay down the debt and take out the HELOC. It probably isn't the most optimized option, but it will make you feel comfortable and secure. And a HELOC is only expensive if you are using the money. If it is sitting in the account, it is essentially free. Best of luck and congratulations on building what sounds like an awesome portfolio!

Bo Smith · Answer

Nice position to be in at 56 with that kind of cash! One thing I'd think about - maybe keep more of that liquidity available for the tax auctions instead of tying it up in loan payoffs first? Those auction deals move crazy fast and having cash ready beats trying to find financing when you spot a good one. How many properties are you realistically thinking you could grab per year at auctions with what you've got now?

David Krulac · Answer

personally I would use the money for down payments for new acquisitions.  One counter thought would be if you don't itemize your Federal taxes, the 2025 standard deduction is $15,000 for individual and $30,000 for married filing jointly.  If your deduction are less than the minimum thresholds, you interest payment for your personal residence is essentially not deductibles and a waste, tax wise, since you'll use the standard deduction whether you have mortgage interest or not.

Matthew Bernal · Answer

You’re in a good spot financially, so this really becomes a capital allocation and risk question rather than a “right vs wrong” answer. One way seasoned investors tend to look at this is comparing guaranteed returns versus optionality. Paying off the personal home gives you a guaranteed after-tax return equal to the interest rate and improves monthly cash flow, while keeping liquidity (or access to it via a HELOC) preserves flexibility for auctions and opportunistic buys. On the rental side, since that interest is deductible, the real cost is lower, which makes it less urgent for some people to pay off.

I’ve also seen investors in similar positions separate “sleep-well money” from “opportunity money,” where some cash goes to simplifying the balance sheet and some stays liquid for deals that require speed. Private refis at that LTV can exist, but they’re usually relationship-driven rather than advertised.

Curious how important liquidity for auctions is to you in the next 12–18 months, and whether simplifying monthly obligations is more of a priority than maximizing long-term returns right now?

Cash or Heloc???

Most Popular Reply