I have 4 properties with reasonable cash flow. These are owned by my LLC.

At current payment schedules, 1 rental pays off the property in 4 years, the next in 6 Years, the next in 9 years, the last at 15 years.

I also have 13 years left on personal home loan. I have 120 k in equity on this loan. So none of my property will be completely paid off for 12 years or so. I am looking to accelerate the schedule.

Here's what I'm thinking
Properties 1 and 2: 80 k in loans. Refinance the personal home loan. Transfer 80 K as loan to LLC. Pay off the Loans on properties 1 & 2.

Use rental cash flow from properties 1 and 2, to pay off properties 3 and 4. This should mean that properties 3 & 4 should be fully paid off in about 3 years.
Once all properties are paid off, take commercial LOC & pay off personal home.

This manoeuvre of money pays all the loans off in about 6 years.

  • Is it legal
  • Does it make sense?
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    "Once Rentals paid off, take commercial LOC & pay off personal home"??? Then you are back to having a loan backed by the rental properties. – mhoran_psprep Jul 23 '17 at 20:45
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    What are your interest rates? Even if you can pay off your personal mortgage with a business loan, the rates on commercial loans are pretty high relative to mortgages on primary residence. – Hart CO Jul 23 '17 at 21:17
  • I think "pay off personal home" should be "loan", correct? In other words the LLC will pay back the $80K? – TTT Jul 23 '17 at 23:59
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    Your new monthly payment is going to be much higher than it is now. Have you actually run the numbers against your current loans with the new amount you will pay per month towards the debt? Unless the HELOC has a much lower interest rate than loans 1 and 2, this shouldn't make much difference than if you took the same total monthly payment and did a debt snowball against your current loans. The maneuver isn't what's making your loans get paid faster, it's the increase in the amount paid per month. – TTT Jul 24 '17 at 0:02

Once all properties are paid off, take commercial LOC & pay off personal home. This manoeuvre of money pays all the loans off in about 6 years.

You would still need to pay off the commercial LOC. So the 6 years may actually be more.

Is it legal

Although jurisdiction is not mentioned; in general, there is nothing illegal in this. There would be some paperwork to show the loan to LLC and money back etc. There may be potentially some tax events depending on how the money is moved from LLC back.

Does it make sense?

As a concept yes, however the key to whether this is profitable or not depends on your current interest rates on all the loans. Generally paying off the highest interest rate loan first helps reduce the total interest paid and hence beneficial.

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