How would you invest 80k (at 3.875% interest)

[rothwem]

I have been trying to find a lender that would let me cash out my duplex rental property at a decent rate since the beginning of the year, when I was notified that my tax appraised value jumped from 276k to 442k. Well I finally found one that will let me cash out up to 70% LTV at 3.875% interest, which would give me about $80,000 in cash to play with.

My original plan was to use it as a downpayment on another rental property. My issue with that right now is that finding and placing tenants sounds super tricky right now.  Inventory for rental properties is tricky too, it’s not always easy to find a cash flowing deal in the areas where I want to invest.

Putting it into the market also seems like not a great plan, since I think the fundamentals of the market are terrible right now and I just don’t understand why it’s going up.

I’m worried that I’m going to have a tough time cashing out in the future at a decent rate, and the equity will be stuck in the property until I sell it. I realize though, that it’s basically the same as borrowing 80 grand, so I need to invest it in something producing over the interest rate to make it worth doing.

So what would you guys do?

[Retire-Canada]

So what would you guys do?

I would take some time and work through all the options. Better to miss out on this opportunity to cash out than to do it and end up regretting it.

[rothwem]

So what would you guys do?

I would take some time and work through all the options. Better to miss out on this opportunity to cash out than to do and end up regretting it.

Yeah, I’ve pushed the pause button for now. The refi will eat about $300/month of cash flow from the rental, so I need to have a good plan for the cash before I take it.

[honeybbq]

I'd do nothing, but I am not a person that wants to collect rentals.

[LightStache]

I would take it out, stick it in short term bonds through the late Fall, and then buy another rental. Over the holding period you will be losing money, but not that much.

Of course you could just wait to refi until you need the down payment, but the risk is that property values fall and you can't take much out of the triplex. If you refi now and property values fall, you just get to lever up more (i.e. your existing triplex will be at 80% LTV and you can buy a new fourplex instead of a tri).

[rothwem]

I would take it out, stick it in short term bonds through the late Fall, and then buy another rental. Over the holding period you will be losing money, but not that much.

Of course you could just wait to refi until you need the down payment, but the risk is that property values fall and you can't take much out of the triplex. If you refi now and property values fall, you just get to lever up more (i.e. your existing triplex will be at 80% LTV and you can buy a new fourplex instead of a tri).

Short term bonds doesn't seem like a terrible idea I guess, though I've never actually looked into investing in them.  How do they work and what kind of return should I expect? 

And the fear is less about the property losing value and more about the interest rate going through the roof.  The interest rates I've seen for the cash on a duplex have been in the 6-7% range, which is just terrible compared to now. 

[LightStache]

I would take it out, stick it in short term bonds through the late Fall, and then buy another rental. Over the holding period you will be losing money, but not that much.

Of course you could just wait to refi until you need the down payment, but the risk is that property values fall and you can't take much out of the triplex. If you refi now and property values fall, you just get to lever up more (i.e. your existing triplex will be at 80% LTV and you can buy a new fourplex instead of a tri).

Short term bonds doesn't seem like a terrible idea I guess, though I've never actually looked into investing in them.  How do they work and what kind of return should I expect? 

And the fear is less about the property losing value and more about the interest rate going through the roof.  The interest rates I've seen for the cash on a duplex have been in the 6-7% range, which is just terrible compared to now. 

My next down payment for a rental property is invested in BSCN which is yielding 1.55% at the moment, so I'm losing money compared to paying off rental property mortgages.

I don't understand the concern that interest rates will go through the roof. Everyone thought that was the case back in 2010-2012, but here we are a decade later and....