What should I do with the equity in my house? SO many options...

[Adam Sankowski]

Hi everyone, I'm asking for some help with my awesome issue of having a bunch of equity in my house. I live right outside of Boston in Somerville which is absolutely exploding right now in house prices. I know everyone talks about how their market is crazy hot but for example a 2 family house, that's behind another house on the same lot (aka. no yard of any kind) just went on the market on my street for 1.7 million. Our 2 family is way bigger and nicer than it and we bought it for 740K 5 years ago.

Anyways, we just closed on a HELCO and I have a bunch of equity to play with, several hundred thousand. My main goal is achieving financial freedom as quick as possible. Our family probably needs about $6,000 a month to live off of if that matters. Part of these funds has already been ear marked for renovating our house to create an Airbnb unit, which will help the financial freedom goal, but that's not the focus of this question...

My question is: is using the rest of the HELCO money as down payments on cash flowing rentals a good strategy? I already own two single fams in Indy and one in KC so I already have out of town real estate teams and contractors in place. My concern is over-leveraging... can banks call a HELCO if another 2008 happens and the price of our home decreases... like they can with capital calls on commercial real estate? Can the rates increase at a dangerous rate since they aren't fixed? Or as long as the properties I buy are cash flowing am I good to go if I'm also using part of the cash flow to pay down the HELCO?

I haven't heard anyone anywhere really lay out a solid step-by-step strategy for using a HELCO in this manner. I hear people all the time say that you should be using all of the equity in your properties ... but how??? And what is the safest way to do that? I don't want to sell because this is only going up in value since a subway line is due to be built in my neighborhood in the next two years. Plus I love where I live and I don't want to deal with a 1031 exchange or anything like that. But, I'm done with working and want to put this equity to work for me. Also, I'm not interested in note investing or private lending or anything like that.

My initial thought was to go and buy a piece of commercial real estate, like an 8-12 unit building somewhere like Indy/ KC/ or Cleveland. Commercial financing scares me but if I used the HELCO funds I could basically pay cash for it and then just pay off the HELCO instead of dealing with a commercial loan that will be due in 5 years. Is this a good idea?

Also, in 10 years I need to either pay off or re-finance my HELCO... has anyone ever run into an issue where they couldn't refinance? Like in 2008? Wow I know this is a lot. Even just directing me to a book or article about this would be awesome. Just wanted to make sure that I'm not missing something or not thinking about something important. Thanks for your time!