I Would Like To Pay OFF 2 of my homes

[Nicholas Dillon]

Hey guys,

I own 3 homes in the Atlanta GA area.  I spend half the year in Indonesia where me and my wife rent a home.  We have started talking about trying to pay off 2 of our homes in Atlanta, and semi-retire here in Indonesia.  If we pay off Home 1, we can live pretty comfortably off the rent of that home here in Indonesia. But, if we pay off Home 2 as well, life would be especially sweet!  To do that, I was intending to sell some stock (75k to completely pay of home 1).  But then with home 2, I need to get creative.  I was thinking about cash out refinancing Home 3 in hopes of using that money to pay off a significant chunk of Home 2.   I just wanted to see if I could get some input on this as we continue to brainstorm about how to make our dreams a reality as quickly as possible.  Thanks very much for the input!

Home 1-

Bought at $166,000

Year Bought- 2015

Interest Rate: 4.375

Remaining balance: $75,000

Value- $321,000

Home 2-

Bought at $197,000

Year Bought- 2020

Interest rate 3.625

Remaining Balance: $163,379.25

Value-$283,000

Home 3-

Bought at $247,000

Year Bought: 2022

Interest Rate: 4.875

Remaining balance: 226,434

Value-$325,000

[Chris Seveney]

Quote from @Nicholas Dillon:

Hey guys,

I own 3 homes in the Atlanta GA area.  I spend half the year in Indonesia where me and my wife rent a home.  We have started talking about trying to pay off 2 of our homes in Atlanta, and semi-retire here in Indonesia.  If we pay off Home 1, we can live pretty comfortably off the rent of that home here in Indonesia. But, if we pay off Home 2 as well, life would be especially sweet!  To do that, I was intending to sell some stock (75k to completely pay of home 1).  But then with home 2, I need to get creative.  I was thinking about cash out refinancing Home 3 in hopes of using that money to pay off a significant chunk of Home 2.   I just wanted to see if I could get some input on this as we continue to brainstorm about how to make our dreams a reality as quickly as possible.  Thanks very much for the input!

Home 1-

Bought at $166,000

Year Bought- 2015

Interest Rate: 4.375

Remaining balance: $75,000

Value- $321,000

Home 2-

Bought at $197,000

Year Bought- 2020

Interest rate 3.625

Remaining Balance: $163,379.25

Value-$283,000

Home 3-

Bought at $247,000

Year Bought: 2022

Interest Rate: 4.875

Remaining balance: 226,434

Value-$325,000

 Few things:

1. If you were to seek a LOC against #3, you would not get much as an investment property its very difficult to get a LOC and they typically will not go above 75-80% LTV which is where you are at.

2. Why payoff #1 with a rate of 4.375%? If anything I would consider paying down #3 by $75k and recast the loan to lower the payment. 

Also if your stock portfolio after taxes is netting you more than 5% you are going into a losing scenario as you are taking money that is earning more and investing it in something earning less. While there is the risk to consider, is that the right move?