Tips / Ideas On What to Do With Equity

[Steven Weiss]

Hi All,

I've been seeing quite a depth of knowledge on BiggerPockets, and finally have decided to post some questions that I've been thinking about. I would like to know what you all would do in this situation (whether you're an insurance agent doing whole insurance, a flipper, a lender, etc)

1. I currently have a property with no mortgage left in the LA area. The property currently nets 4100.00 in rental income. In what ways would you use the equity? Some ways I considered were the following:

A. taking a fixed rate home equity loan against it and just purchasing another home and just using the rental income the home produces and my job to pay the loan and other expenses and call it a day. 

B. take a loan against the house, use the money to loan to multiple people (as hard money and as notes) and collect the spread.  **In regards to notes, I'm assuming it's hard to be a primary lender in Los Angeles, as I'm assuming many people wouldn't be willing to put up their home as collateral for 90k if their home is worth anywhere from 700k, (even 500k). Please correct me if I'm wrong assuming this. 

C. take a loan against the house, do BRRR on properties (I'm assuming this more so works on a market upcycle, as in a down cycle banks may be less willing to refinance or loan out money; again correct me if I'm wrong). Also, I've noticed Los Angeles properties are just really tough to have positive cash flow and make BRRR work. Is it worth it to BRRR in another state ie Phoenix, Portland, Seattle, other major cities?

D. 1031 tax exchange for multiple properties / a bigger property that needs renovation ie apartment building, triplex, quadplex, etc

2. Second part of my question is in regards to Notes. I currently have 3 notes, all in decent value, all of which are primaries. Not that anything is wrong with the 3, but if any of you were in this situation, would any of you sell one of the notes in order to use it for hard money lending?  For example, the note could be used for hard money lending at 10% and compound faster than a long term note at 6.5%) 

3. What do you all think of SBLOC's (securities backed line of credit) and using the money towards either hard money lending or flipping houses? I understand that specific securities ie equity only allow 50-65% LTV while treasuries I believe have about 90% LTV. However, there seems to be alot of risk in relation to taking a SBLOC (ie if I borrowed 100k of equity, and stocks drop to 25k, a maintenance call of 75k would be issued). In short, What would you do with approximately 100k of stocks? Dividend yield to hedge against expenses? do a SBLOC to remodel homes?

**I know this post is heavy, and I thank all of you in advance for your opinions / replies. Also, please be honest. If you feel something truly does not make sense to do, just be blunt.