HELOC

[Mike McKinzie]

I am mulling over an idea and I would like to hear other's input. For those that don't know, my mother passed away in April and they had a small family trust. I just found out last week that they have an active HELOC on their residence. It just so happens that I am moving to that house in November, in Southern California. The HELOC is for $210,000 and they have only borrowed $12,000 on it. What intrigues me is that the Fixed Interest Rate on the HELOC is 3.99%.

So my question is, "Would you pull this out and invest it or leave it there for a reserve fund?" I know I can invest it and get some really good returns. Even a 10% Cap Rate puts some nice change in my pocket. But I could probably get 15 or 20%.

Ideas!?!?

[Vikram C.]

Mike, I think this is more a personal decision than a business one. You are an experienced investor and I have no doubt that the most profitable thing for you to do would be to take the money and invest it in a better opportunity.

But you mention that 26 of your 30 properties are free and clear. That tells me that you are comfortable with investing in that manner and have become very successful doing it that way. I generally do not like to change a winning formula unless there is a clear need.

Good luck with this decision and do let us know what you decide!