60K to Invest or pay off debts?

[Fernando H.]

Hey guys, I am new to BP, but am very impressed with the amount of experience and knowledge on this forum and its members. I need some financial advice.

I have 2 Rental properties where I am owner occupant of one of the multi units.

I have 60k in equity in one of the properties that I will like to use to consolidate debt or continue buying more rental properties for an additional cash flow with a HEL at 4.50% interest. 

I have debt amounting to $1,500 / month that I can consolidate with a Home equity loan and be free and clear or use the 60k or a portion of that amount to continue buying more rental properties at 20% down where decent SF or Multi Units go for 60k.

car loan at 440/month - 17k left

installment loan 375/month - 30k left 8.5 interest

credit card 500/month - 7k left at 0% interest for 14 month

HELOC - 200 / month - 9k left at 3.50% interest

[Kevin Bellavance]

@Fernando H.

Hi. Here's what I think:

Figure out if your return on investment while buying porperties is higher than the interest you pay on your debt. If so, then you could invest in rentals. Your ROI on paying off your debt is the combined interest rates applied to the debt. An idea of what you could do is using your property equity, pay off all the debt with an interest rate over that 3.5% (HELOC) and use the difference to invest. This is called ''Debt Consolidation'' and it allows you to save as much as you can on interest while investing since you can bring debt like a car loan with 8.5% interest to a 3.5%.
However, if you find out that your return on investment with rental properties is let's say 12%, you could just don't bother consolidating your debt, and put that whole 60K into that 12% investment (IF you feel comfortable with the amount of debt you have).

This is what I think.

Pleaser, consider that this is only a general advice. Before acting, you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.

Best regards,

Kevin