$200k in cash from HELOC, need to make a choice

Realtor · Los Angeles, CA · Member since 2018 · 952 posts · 1k+ votes

4y

Originally posted by @Jade Smith:

Coming to you from Los Angeles. Need advice.

We've lived in our house for almost 10 years, during which we have grown about $600k in equity. We just pulled out $200k with a HELOC with the intention of doing some home improvements. The house is in good shape generally, but could use updating in the bathrooms and kitchen. Our orignal thinking was to get the house ready to lease or convert to a short term rental. We want to move this property into the assest column! However, I am itching to start growing a real estate portfolio (first focused on cash flow and then on equity). I am wondering if it would be more prudent to use the capital for a BRRRR, flip or multi-family? I'd like to invest in LA since it is where we are and what we know, but it is an expensive market. Willing to go into class c markets, but even then it's expensive entry. Any advice is welcome. Thank you.

Hi Jade,

LA is a very expensive market, but I've decided to keep my investments here. If you have income from a job/career outside of real estate, I think investing in LA for longterm appreciation make more sense than Midwest cashflow.

When you start considering LA's c-class neighborhoods, a lot presents itself. There's a lot of opportunity in South LA. You won't find cashflow like you'll find in the Midwest, but you will find properties that support themselves while growing tremendously in value thanks to development and gentrification.

I wonder if turning your current home into a rental is the best use of the equity you have in the property. Actually, my first question is: where will you live if you turn your current primary into a rental? Because the cost of living in LA is so high, it's important to consider your living options when making big financial decisions.

Best,

Jon

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Inessa Stysis

Real Estate Agent · Los Angeles, CA · Member since 2019 · 49 posts · 42 votes

4y

@Jade Smith without knowing too much about what your house looks like, and what area - you might not have to do all that much to make it an Airbnb opportunity. White paint, and fun decor can go a long way in making a listing pop on the platform. I partner with an Airbnb designer and manager who can run numbers and tell you what expected vacancy and cash flow will be if you’d like to find out.

As far as what to do with 200k, I think that’s plenty to make something happen in LA. You can flip properties with hard money to build up profits and then eventually use that profit to buy investment properties. I’m personally using that strategy myself right now.

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Jade Smith

OP

Member since 2021 · 2 posts · 0 votes

4y

Thank you for all the feedback. Inessa - I'd love the designer's contact info if you are willing to share. Thank you!

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$200k in cash from HELOC, need to make a choice

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