@Tom HallAt 7% if you can I would pay it down as investing it net after tax gains may not get you the 7% you are paying - so it’s less riskDownside is you lose liquidity of that money as it’s tied in your propertyIf rates come down in future you can refinance and even take some of the cash out.Regarding your question are rates coming down, a lot of factors come into play but right now it does not appear there will be significant changes to rates over next 3-6 months.

Also, check if they have skin in the game (their own money invested), as it shows they’re confident in the deal and aligned with your interests.If you’re considering alternatives, REITs are fantastic for super-passive investors who want steady, low-effort returns—usually about 2 points above a savings account—but you lose tax benefits and control.

There are income tax implications of both..

Then I would have a little more equity and like you said at that point it would be a loan against an investment property which is tax deductible right? 

Or maybe there's a special sauce for sloppy tax professionals?

So you have LP who makes investment then when it does not go right has no clue what to do @Chris Seveney then points out not only did they get wiped out but if there is significant cost seg taken there will be some pretty hefty tax due and the LP did not know if there was a cost seg or not..

This is relevant for multiple reasons 1) appreciation is where the real wealth is generated in RE 2) real estate has tax advantages over cash flow 3) in CA property tax increase is capped.  

People are going to start thinking about spending their tax refunds in the middle of January.

If you need financial help, ask under the "Finance, Tax, and Legal" forum.

Also, we'll need to know what your other expenses will be (taxes, insurance, etc.).