Pay off HELOC or stock pile cash
I am closing on my first deal this Friday and a second deal in another month. Both are single family residential homes that do not have tenants in place. I am putting 20% down on each from equity on personal home. Should I pay off the HELOC as fast as possible or stock pile cash? I don't like debt, but I also don't want to pay the HELOC off. I want my tenants to pay off the HELOC. Any advice?
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#5 Coronavirus Conversation Contributor
- Real Estate Broker
- North Richland Hills, TX
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#5 Coronavirus Conversation Contributor
- Real Estate Broker
- North Richland Hills, TX
What's a stockpile of cash earn vs. how much does your HELOC cost on an after-tax basis? The answer wouldn't be so clear-cut if it was a home equity loan, but since it's a line of credit I recommend paying it down when you have no higher yielding investment options, and drawing from it to fund future investments as necessary.
Money is fungible, so it's really irrelevant whether the paydown comes from tenants or other sources.