Cosigned on my Daughter's Student Loans - A Creative Way to Pay?
Rather than bore you all with the details, just suffice to say that I cosigned student loans (both government and private) for my daughter's college. Of course as a cosigner, these show up on my credit as loans as well as hers. All combined they are a little more than $100,000. Some of the private loans have interest rates as high as 9%. She has been doing a decent job of paying the loans (although I have had to step in and help her out fairly regularly) but she doesn't have decent enough credit to be able to refinance on her own to get a better rate. She has been able to defer the government loans up till now, and her monthly payments have been right around $800/mo. The government loan deferrals are about to stop however and her loan payments will increase to $1300/mo. She can't afford that big an increase so I have been thinking about ways to help her out. Please read on and give me your thoughts...
I live in St Louis, and the rental market is good here. I currently own 25 units (spread across duplexes, triplexes, and 4 unit buildings). All provide good positive cash flow. Here is what I'm thinking. I can pretty easily take out $100,000 HELOC on my personal property. If I use that as a down down payment, I should be able to leverage it against about a $500K loan. Prices are still relatively cheap here in St Louis. In fact I have seen a few 15 to 24 unit apartment buildings for sale in the past few months that are situated in the the same area I have my existing rentals (so I know the neighborhoods) and would come in right around that $500 to $600K range.
If I were to pick one of these up, I'm 70% sure I could get plenty of cash flow to pay debt service, taxes, CAPEX costs and still have enough left to pay the $1200/mo in her student loans. If I had her pay my HELOC, I think I could keep her payments around the $600 to $700/mo range.
I guess what I'm looking for is validation that I'm thinking the right way. It seems to me that when it was all said and done, I would have been able to pay off her existing student loans, she would be paying the same or lower rate (since she would be paying of the $100K HELOC at a much lower rate), and I would end up with an apartment building.
What am I missing?