What would you do 133k heloc 50k cash

[Gary Love]

We have a duplex that cash flows about $1600 in the Columbus, OH area. We have 133k Heloc available and 50k cash.  For the more experienced investors what would you do if you were in our situation? Looking for more long term hold but open to suggestions.  Just want to make this money make a difference for our future and retirement in about 15 years or so. We appreciate any and all advice. Thank you. Have a great weekend!!!

[Randall Alan]

@Gary Love

Part of your answer depends on what the rate on your heloc looks like. Presuming it is in the high 6's to 7's, much of your normal profit from using those funds will end up in the bank's "interest column" on your REI spreadsheet. With that said, part of my advice to you is that it is ok to sit still when there is no good deal to be had. So always keep that in mind. I'm a local investor and unless I can find a deal that cash flows you won't see me buying just to be buying something (ie. Just for appreciation). It's smarter to wait for a good deal to come along at a good interest rate, then to tie yourself up with a property that has expensive financing and cash flows less.

I currently have my cash sitting in a high-yield savings account earning close to 5% apy (safe, happy, and ready).  CDs are paying better than that, but obviously your money is tied up in the event that something good comes along, so I prefer the high-yield savings account so I have access to the money at a moments notice.

If remote investing is your thing, there is a blog post here on bigger pockets that talks about the four market areas that are still cash flowing:

https://www.biggerpockets.com/...

I was researching a multi-family today where the fact it was a triplex made a big difference on cashflow over a sfh or duplex… so you might look towards that end to offset the higher cost of borrowed money.  Also, sort of obviously (perhaps), the bigger the part of your deal the (interest free) $50,000 can play, the better… Which translates to “the cheaper the home you can buy, the better your numbers will look when you pay your balance down by the $50,000.”  

“Patience is a virtue” As they say, so I will encourage you to be patient and wait on the market to settle a little bit (Unless you find a deal that cash flows at a rate that makes sense to you).  This may mean sitting idle for a year, but when you figure the cost of having to refinance out of an expensive mortgage, it actually makes more sense to wait than it does to go ahead and buy with a high interest loan when I run the numbers.)

Hope it helps,

Randy