Hello BP Community! I'm seeking advice on the best way to pay off or pay down my HELOC. I have 2 properties that were previous house hacks and have decent cash flow on their own. In 2023 my wife and I took out a HELOC on one of the properties to use as a downpayment on our current residence. In hindsight, this probably wasn't the right way to look at this, but we were counting on the cash flow from the rentals to offset some of the mortgage payments on our current home. However, when you factor in the HELOC, we have a negative / break-even cash flow (HELOC payments are about 25% of the revenue from both). So, I'm hoping someone here can offer up some advice that we're not thinking of. I would prefer to hold on to both properties if possible, but if we cannot cash flow (with the HELOC), we cannot do that. Note that because both of these were house hacks, we have really good interest rates, so a cashout refinance isn't really an option. These are the options we're currently thinking of:
Option 1: Sell the house that we most recently lived in when the current lease is up in June. We did live in the house for 2 of the last 5 years, so we wouldn't have to pay capital gains tax. The equity in the house is almost exactly the amount needed to pay off the HELOC, so we wouldn't have anything left over to re-invest. Option 1A: Use the remainder of the HELOC (~$20k) to add some value to the house and hopefully add enough equity to have some left over after paying off the HELOC.
Option 2: Find investors to pay off the HELOC for an equity stake in one of the properties. The problem with this option is that the equity payout would be pretty close to the same as the HELOC payments. So I would need to come up with a creative way to structure this so that the equity payouts are as low as possible.
Thanks in advance for any advice we can get!
