Would you / have you done this?

[Guy Yoes]

I posted about this concept earlier. However, I now have more information. I am re posting so it doesn't die as an old post. Thanks for any and all comments.

I am considering taking a loan from my bank to finance another note. My goal is to use my equity in a rental property to increase income.

I talked with the bank, No loan or appraisal fees. The difference would be about 2% between int. paid and int. earned.

After talking to the note people and bank here’s is what I have:

Loan from bank 6.8% interest/ interest from note 9%

5 year loan for 75K @ $1480.00 per month / total paid for loan $88,800.00 total int. $13,800.00

5 year note for 75K @562.50 per month int. only / after 5 years $33750 int. + 75000 principal = $108,750. Difference $19,950.00.

My monthly rent from my properties would be $1500.00 after taxes and ins. This would pay the monthly loan cost.

The interest would decline over the 5 years and the note would pay the same.

I could deduct the interest to offset taxes but would have more taxable income.

Is this feasible or would it be a wash and not worth the effort?

Option 2

Take the loan and buy a house to flip. Short term loan and more return but more risk (IMHO). I have never flipped!

Any thoughts.