Low low interest $5m loan... Now what?!

[Drew Whitehead]

Long story short. I have a duplex rental and a single family house. Getting divorced and the wife gets the house, I get the duplex as far as assets.

I am an architect during the day and have been doing high end and deep remodel/additions at night. I typically aim to make at least $100k per flip.

I love flipping but it was an always a means to buy more rentals. Buying rentals in the Utah market right now is hard with the high purchase costs so I have yet to buy more than my duplex.

However, I found a loan with less than 1% interest that I will be closing on in about two months. My question is what would you do given my scenario? Right now I plan on doing a few flips simultaneously but I'm torn on what to do about the rentals and how to maximize my loan over the 7 year term.

Do I pay off my current properties and find good deal properties and pay cash up front? Or do I find the good rental deals and finance them with loans to keep my equity?

My ideal situation is to pay back the entire loan and interest over the 7 years as well as having a minimum of $20k/month in cash flow.

Curious to hear what you think I should do or what you would do if I were you! Go!

[Evan Polaski]

@Drew Whitehead, I am with Drew Sygit: more details, because I would happily take this loan too.

I think this all comes down to deal flow and the actual terms of the loan.  If you have to repay the loan in the near-ish future, and your property is supporting the existing loan, I would not pay off the existing loan.

In the current hot market we are in, I do not see rentals as the way to go.  As you mentioned, they are all overpriced.  If you have a steady pipeline of flips, this could be a good way to take advantage of those, and even if you have to hold on to a couple while finishing others, I see this as the best way to grow your net worth in todays market.

I would also look at using that loan to become other people's private lender (although this can be just as bad as being a landlord sometimes).  If you can borrow at 1% and lend at 10-12% plus fees.