First-Time Introduction and HELOC Question:

[Brian K Akamine]

Hello all, My name is Brian Akamine. I'm new to BP. I'd like to introduce myself to the group and also I have a question for advice.

First, a little of my background. I'm a former SoCal native 35 years in a city called Hawthorne. I'm 54 living in King of Prussia, a suburb of Philly. Two teenage daughters married 22-years.

CALIFORNIA PROPERTY:

I own a 4-unit apartment in Gardena, CA with my mom and sister (Joint Tenants). It has (2) 1-Bdrm and (2) 2-bdrm. It's paid off, appraised at $958K, took out a $300k HELOC to use for consumer debt consolidation, cash flow $2750 per month. More wiggle room for rent increase, but long-term tenants and not yet ready to explore increased cash flow.

PHILADELPHIA PROPERTY:

I also own a 3-bdrm row-home in Norristown, PA. Steady tenants. Rent $1050 per month. Appraised at $105K. I purchased in 2003 for $90K, lived in it for 10-years then moved into my aging mother-in-law's house as a permanent living arrangement. Back then, values when up in 2008 to $135K and took out an HELOC for $35K and have been paying interest only for past 8-years (a time when I was under-employed doing non-profit work/Christian Church planting ministry). I have a 1st Mortgage of $59K principle balance at 5.37% Fixed (16-years left to pay off). The HELOC is $34K currently at 4.5% ARM.

With this rental property that used to be our primary residents, I'd like to begin the process of setting it up as an LLC and begin investing in more rental properties in the area and even other states as Orlando, Florida and beach communities where my sister lives.

HOME EQUITY LOAN:

The Bank of America $300K HELOC was a 2.9% Adjustable Rate and we recently locked $212K into a 4.7% 30-year Fixed Rate. The payment is $1108 per month.

The remaining balance is $88K is still on the ARM but we can lock it into a Fixed Rate of 2.4% if we do it by July 31st at a monthly payment of $334.

THIS IS $88k REMAINING TO USE FOR INVESTMENT PROPERTY!!!

QUESTION FOR ADVICE: I was thinking about using this $88K to pay off the balance of both 1st & 2nd HELOC on the Norristown property so that it rents would be all "cash-flow" minus expenses. Should I do this or use the $88K HELOC remaining balance at 2.4% Fixed Rate for PRIVATE FUNDING to get a higher rate of return "OR" use this to buy another property as a "BRRR" Investment to leverage the equity for growth?

Any advice? I'm not sure yet what to do? What's the most profitable approach to using this?

Note: I'm not asking for any mentoring or soliciting any offers or such. Strictly the first intro of myself and a real-life dilemma.

Brian Akamine

[Tony Nguyen]

@Brian K Akamine  that depends on what your financial goals are long term. If you're just trying to have the properties all paid off free and clear before you jump into the next one then go ahead and pay it off if it makes you feel more comfortable. Take into account how much cash flow you're making off the Norristown property now compared to how much cash flow you'll make if you end up paying it off. And is that extra income going to help you reach your goal faster or just slow you down?

 Compare your opportunity costs. If you're already making a decent amount of cash flow from the property already then I would use that extra money and put it into another property in order to build your portfolio faster and increase your passive net worth. Otherwise if too much risk is your biggest concern then go the slower route of paying it off free and clear then move on to the next. It comes down to how risk averse you are and how fast you're wanting to build. At the end of the day every investor is different. Some want to build fast while others want to go slow and steady. Hope this helps.