Trade Low Interest Rate for Bigger Asset?

[Shane Elias-Calles]

Hey BP,

If you had a single family rental with 250k worth of equity in it with a 2.625% interest rate, and about 800 a month in cashflow, would you trade it up for a 1 mil dollar property at 8% interest rate and 1600 worth of cashflow?

Or would you use a HELOC on the current property and use the equity to purchase another?

Thanks

Shane

[Brittany Minocchi]

Can you find something in your area (or wherever you plan to invest) that will get you the extra $800 in cashflow that the $1MM property would get you using the equity from the current property? How would appreciation of the properties compare? Rates on HELOCs/HELOANs aren't the best right now, but in many cases it's still a better blended rate than a first position refi with a low rate like yours.