House paid off, want to take out cash to invest - help?

9 Replies

Thinking about taking $250k out of a house I just inherited (with two siblings) in the SF Bay Area

to invest in RE. Can anyone tell me what strategy I should/could use? HELOC? Cash out refinance? Other?

Any issues I should be aware of? Thanks team!

You would be farther ahead to simply sell the property, divide the cash then determine what to do with it later. It is never a good idea to try to deal with joint ownership of a property.

Unless the property is a purpose built multi unit rental property. Definatly sell if it is a SFH.

Thanks, Thomas, but we currently live in the home - have for years. Selling is not an option a this point.

Updated about 1 year ago

The investing will be up to me and siblings will simply split proceeds.

@Eric Upchurch I would connect with a lender and let them know your goals to see what they would recommend. It's going to depend on many factors as well as your specific goals

Thanks @Ariel Vincent . Do you or does anyone else know how a HELOC works at least? Definitely going to talk to my local bank, but have just never done a HELOC or cash out refi. Maybe I should just search forums for "HELOC". I'm sure there are hundreds of forums already.

@Eric Upchurch check this out to see if it helps!


You can definitely take a HELOC I did it once. It will be typically up to 250K (if the house value supports it).

You can get a fixed rate also for a year or two and after a year you can do another refinance and roll the helloc into your conventional loan. If you hold  Helloc for more than a year it will consider conventional refinance not a cash out...

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@Eric Upchurch - sorry for your loss. Get your siblings on board with a full cash out refi (ie worth $1000k, get $800k out) and have everyone escrow money for their share of at least 12 months of mortgage payments. That way you get the mortgage interest deduction off your taxes and some investible capital. CAUTION!!! Statistics show that people who receive a WINDFALL of money usually spend it all within 2-3 years. Home ownership helps the average joe because property pay down is forced, non-spendable savings (without a heloc). I know I have lost money / was not frugal when my bank account was flush with money. I bought a $2000 membership to the local chamber of commerce because I had a lot of business ‘loan’ money in the bank and a credit card with 0% apr for 12 months. I never went to a single meeting (because I was working so hard at my place of business).

@Eric Upchurch you should really take a look at you ROE or return on equity. I bet you are sub 5% and therefore you should get a little higher return. I wrote an article about this...

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