All Forum Posts by: Armando Carrera

As others have said, I think you can get a better return on your money than paying off the rental property. You would pay down the debt on your primary in option #1, but would still have $225 in debt and the 10% would be locked away for some time. I would look to invest the money somewhere else that can provide a higher return, I personally feel RE is one of the best places to make a strong return. Look at buying another rental of possibly a rehab project.  

I'm with Josh on this one. I wouldn't worry so much about the higher rate on the primary as long as the payment is feasible for you. 

I personally would probably use the 100k to acquire a fixer, BRRR it and get your cash out. If you buy it right and its sub 300k you can probably do it with 100k. Using some debt for the rehab may not be a bad idea if the debt can be repaid from the cash out. I have an investor doing this method all over North Phoenix and renting to Section 8 and having great success with it.

whatever you do don't pay off the 3% loan. Are you in a position where you can house hack a new buy. If not I personallly would look for a seller finance deal. Having a very hard time making sense of #'s on anything that is not house hacked or seller finance. I guess you could find something in Phoenix where they are making it easy to add DADU's, I have  a friend who built Shed/DADU for 70K including everything and rents for 1400 which makes the property cashflow in addition to rents from main house. 

Be patient. No need to rush into any decision. If you want to expand your portfolio then leverage the net amount into another property, if you want to maintain and improve what you already have then consider using the money elsewhere. $100K is a great amount to start a business as well. 

@Armando Carrera never do #1 or #2. You might refinance #1 in a few years, but don't lock up your cash in that property, once you do it can be difficult/expensive to get the cash back out of it. Don't touch #2, just enjoy the fact that you have a good rental with a great interest rate, at some point you might want to do a cash out refinance on it, but probably not until your LTV gets super low.

If I was you I would buy another primary residence using a low down payment, save most of the cash and then buy another primary residence a year later, and/or use some of the money to buy an investment property putting 25% down and save some of the cash as extra reserves.

Probably maximize your return on that 100k. 1. It’s not enough to eliminate your personal mortgage which takes out the benefit of additional security  but call that a 7.5% return

2. You’re trading that money to eliminate debt at 3% I.e. it’s equivalent to a three percent return + the benefit of getting your money in cash instead of mortgage pay down. You would be better off right now in a money market paying 5% (I’m not an advisor so do what you want but I’d borrow all the money in the world if I could get it at 3% and lend it at 5%. The 10 year is over 5 too)

3,4,5 I’d look to invest it in something else. Rental property would be good if it makes sense for you. An index fund may make sense. This venue will likely recommend real estate 

That's awesome congrats. RE is cool like that, you buy one then two having no idea how you get to next and then it happens. Seems like I was in very similar situation just getting my 2nd prop just yesterday.