All Forum Posts by: Alex Corral

@James W. That is odd. I've called about 15 banks & CU. All have 10 year draw & 20 year amortization.

Christopher Giannino Not really a "sweep account", but mainly to have access to more cash as soon as I pay it down. Basically also use it to get 100% financing, instead of using my cash reserves.

@Christopher Giannino

Yes, as hotly debated as it is, lol. I just feel, the savings in the interest combined with much higher cash flow are why I want to pay them off faster. I know it's not everyone's strategy though.

Thanks for the info. I know the HELOC debate is still out, but from the research I've done, it seems that that type of loan will be paid off faster. So, even if the rate does increase, it will still be cheaper to pay it on a HELOC. There are tons of threads about it here on BP. Seems to be split though. Wish I had seen this sooner since Prime has not changed the last 10 years, until recently.

Originally posted by @Sam B.:

Why continue to use variable rate non deductible heloc money when you can cash out refi your rentals, have 30 years to pay the loan, lock in a fixed low rate, and deduct the interest?

> My other dilemma is if I buy the rentals in an LLC, and use the cash flow to pay off the personal HELOC, what issues am I getting into? Should I even put them in an LLC?

You won't be able to refi using a conventional loan if the property is owned by an LLC.

From what I've read, the simple interest on a HELOC will get paid much faster than a conventional mortgage. The higher rate in this case, is not so much a negative. Plus, as soon as I pay down the HELOC, I have access the spend that cash again.

I did not know that about the LLC/conventional loan. So how does everyone do it? Commercial loans?

Originally posted by @Ryan Weirick:

From my understanding a HELOC is still tax deductible if it is being used to buy rentals. It isn't deductible of you are using it to pay off credit card debt or to renovate your primary residence.

 Wow, that is great news then!

I am in the process of obtaining a HELOC on my primary, with plans to buy some rentals. I've been doing a lot of research on how to pay down the HELOC faster using it as a checking, and have some questions as things are getting a bit muddied.

I'm debating on buying 2-3 properties cash (HELOC money). I think this would allow me to make a more aggressive offer, and saves me about 3% in closing costs per property. I was planning on using all the cash flow from the rentals to pay down the HELOC faster. In addition, I plan to deposit extra income left over from my paycheck. At this rate, my plan is they should be paid in 6 years. At that point, I would start over. With 6 properties, the cash flow shouldbe more and those 3 properties paid in 3 years or so.

Pros: More aggressive cash offers, save on closing costs, pay down HELOC faster.

Cons: HELOC interest is no longer tax deductible, while a typical mortgage on the rentals would be. Will take me 3 years to buy more rentals paying cash.

My other dilemma is if I buy the rentals in an LLC, and use the cash flow to pay off the personal HELOC, what issues am I getting into? Should I even put them in an LLC?

I also wanted to invest in some private notes and use those profits to pay down the HELOC faster.

What all do I need to do?

TIA

Thanks Matt K. You have really posted some great info. I was seriously looking at Cleveland, largely because of Amazon. I had been holding back though, because I just still feel properly values there will barely increase for an exit if needed.

Like Lana Lee said, you can get a fixed rate HELOC too. I'd prefer to get a HELOC, btw Lana Lee that is an awesome deal on the rate! What bank did you use?

I just bought a condo in Phoenix. 80k sales price. Put down 25% to get a bit better rate because of the smaller loan amount ($60k). Rate on a 15 yr investment is 4.5%.