Maybe I shouldn't have paid off my rental....

[Emanuela Hall]

A couple of year ago I paid off my rental with the cash out from my home refi (lower interest and saving $ for paying it early). I'm not sure if it was the best financial decision but now I'm looking to buy another rental and have some money put aside for a down payment. I was wondering if I should use my own money or maybe use the rental equity instead... or there's even a better option. Thank you

[Timothy Howdeshell]

Quote from @Emanuela Hall:

A couple of year ago I paid off my rental with the cash out from my home refi (lower interest and saving $ for paying it early). I'm not sure if it was the best financial decision but now I'm looking to buy another rental and have some money put aside for a down payment. I was wondering if I should use my own money or maybe use the rental equity instead... or there's even a better option. Thank you

 I think what you did is perfectly fine. Many real estate people are grow, grow, grow using debt and that strategy does work. One of the mean wealth builders from owning long-term rentals is the loan pay down. For one your tenants are paying off the debt not you and for two inflation makes the cost of paying that debt back cheaper over time.

That being said, there's a lot of Peace of mind to having a paid off rental. And it sounds like you're able to get amazing interest rate on that refinance effectively moving the debt to a 2.75% interest. 

I wouldn't recommend taking on a HELOC on your primary unless you're going to do a fix and flip, BRRRR, or think you can get your money back very quickly on a short-term rental.

heloc is good for a short term use, but not a good option for long-term debt.

You can always just put a mortgage back on the house that you paid down to get the money to keep moving forward. 

Best of luck!