Investing in Real Estate with Home Equity? [
Вставка
- Опубліковано 27 кві 2015
- www.biggerpockets.com/askbp007 - In this episode of the #AskBP Podcast, Brandon Turner explains how to tap into your home equity to purchase investment properties. You'll learn the difference between a loan and a line of credit, as well as when (and if) to use each on specific real estate deals. Additionally, Brandon covers the negative aspects of using your home equity, and ends with a story of how his in-laws used their equity to buy an incredible duplex.
- Навчання та стиль
i like the part, towards the end, about taking the heloc, buying the investment property, fixing, then refinancing with a 30 year mortgage and pulling out 100% of the heloc. Which can be used again and again!
Best way to BRRRR in my opinion.
Brandon, I appreciate your thoughts, it was explained in an easy way.
Explained a lot that I just didn’t comprehend prior to this so thank you!!
Great information. I will definitely be looking into HELOCs. Thank you!!
great video. lots of great info packed in here
great information
Is it true that the interest on these HELOCs and HELs is calculated differently from a mortgage loan? I heard something like the mortgage is calculated through an amortization schedule and a HELOC is simple interest, leading to the borrower paying way less money on interest for the HELOC?
As a self-employed person, another downside of a HELOC is that it counts as an additional debt against my income, even if I have not used any of the money. Not to say I wouldn’t choose to use one anyway! But it is something to consider.
Spot on Advice. All money placed in a traditional mortgage is basically lost without modification.. This works and works very well.
This was good
ok, so I'm thinking about quickly paying down my mortgage just to be debt free earlier. but pending market stability I would be able access that equity to purchase a rental that makes sense. but if a good investment doesn't present itself then I continue to increase equity in the meantime
Good advice
For what its worth I own a home free and clear, I want to rent it I have been told its worth 24k a year in rent, I want to take out a loan on it a buy another home, pay for it free and clear that way I always have one home free and clear and allows me to take a lean out on each property until I have 5 or 6 income property's.. is there anything to prevent me from doing this? is this a good business model other than obviously the loans heading in only an 80% direction continually shrinking the value?
HELOC might be the move
So can you use a HELOC to pay 20% down on an investment property which you also mortgage? You would use the potential rental income as income and if you calculate it properly the rental income will cover the HELOC and the investment property mortgage. Is that feasible?
Ania O yes
Jimmy Coinadello Apparently not in Canada or Ontario anymore because of the new stress tests. Should have done this before Oct. 2017
The investment property should not go into fixed mortgage but rather keep it in a first position HELOC that has a free overdraft checking linked to the LOC and dump all your income and rental revenues and pay all bills out of it. The income pushes down the interest charged and pays the property down in no time
hi Johnny can you elaborate on this, thanks ahead of time
Hmm.interesting. Would be great if someone could further elaborate?
@@jahskido06 that is called paycheck parking or velocity banking from what I understand. There are some good videos out there on it.
Johnny Castaneda - hi Mr. Castañeda...can you elaborate exactly what you mean by keeping the rental property in a first position HELOC that has a free overdraft checking linked to the LOC and dump all your income and rental revenues and pay bills from there to lower down the interest and not have the investment home in a fixed mortgage? Thanks.
What’s the current interest rate on HELOCs?
Why is it so hard to get a heloc from a rental? I own a rental property out right. I'm wanting to get a heloc on my rental but everyone is telling me it is very difficult to do so.
Because of 2008-2009
@@ramboxlegacy14 Well I got one and aside from a lot of paper work it wasn't very difficult.
Actually it's pretty easy to get a HELOC on your rental property. The LTV will be a a lot lower though.
Hey sir could you give me some info on that?
Why is the LTV lower on a rental property? In my case the rental property is completely paid off.
You can't get a HELOC on a rental property, only your primary residence.
You may be able to get a LOC (line of credit) but not a HELOC.
Yes there's a difference, no I'm not going to explain it, lol. You have the same resources available to you that I did when I learned about it.
It's all a gamble really....yolo so just do it hahaa
You lost me at your in laws can refinance, turn it into a fix rate 30 year mortgage and then get their home equity line of credit back. How does their line of credit come back by refinancing to a fixed rate 30 year mortgage? They still have line of credit out on their other home..
Because when they take out a mortgage on the investment property, they get their investment back from the bank in the form of cash. Deposit the cash into the HELOC, and it's paid off and the balance is available again.
@@mattschamel6550 Can you elaborate a little bit more on how this works? It's something I may want to do. Thanks Matt
@@celtkees what is it you're wanting to know?
You own your primary residence, and you have equity. Say your house is worth 200k you've paid down 100k that leaves you 100k in equity. You can apply for a home equity line of credit, against said equity in your home.
Let's assume you got a HELOC for 80k.
You find a house that you want to buy for a rental that needs work. You do your homework, and find that the house will be worth 120k once it's fixed up.
You make a deal with the seller for 30k. You withdraw from your HELOC enough to buy and repair the house. You do all the repairs and it costs you 30k
Now you have 60k invested in a house that is worth 120k. You rent it out, and now you're collecting $1000 a month on rent.
You go to a bank and get a 30 year mortgage against the rental property.
Let's say you borrow 80k against it.
Now you have 80k in your hand but you still owe the money you took out of your HELOC. Remember the 60k you used to buy and fix the rental? Ok, take the money that you pulled out of the rental by getting a loan and pay back the HELOC.
You'll pay back the 60k plus whatever interest you accrued while you had the money out.
Now you have a 0 balance charged against your HELOC, meaning you now have 80k that you can use again to purchase another property.
One last thing. You know when you took the loan out on the rental after it was fixed up and rented? The 80k? Well, you only had to pay back 60k (plus interest) so whatever the difference is between paying off your heloc and 80k you get to keep, in cash, tax free!
There's obviously lots of intricacies involved in this process, but in a nutshell, that's how the process works.
Study about HELOCs.
Study the, BRRRR Strategy.
Study about tax advantages for real estate investing.
There is tons and tons and TONS of information about all this stuff.
Hope that helped. Best wishes.
What banks are lending 90% LTV
There are plenty just search and keep looking. You may need to have great credit but they're there.
I'm so confused,if they will lend you 40k aren't there closing costs or down payments thus reducing the 40k
hi,
I own three rental properties paid off, about 150k each…NC area..
i rent myself. ...
Can i get a home equity line of credit, heloc, on investment properties?
do i go to a local bank or where to go, to get results..?
i have no experience in this.
my goal would be able to use some cash only when I need it , to make cash offer and do a fix flip….
i hv high credit, no debt, some little cash of my own to work with
thx much
You can't do a HELOC if it isn't your personal residence, but you can do a LOC (line of credit).
You may have to go to a few banks to find the right one, but it is possible.
I got a LOC on a rental I own free and clear, up to 80%
LOC's aren't that great because they are variable.
Thanks for the info. Would rather you directly answer the question that was asked. Rather than explaining what equity and other basic real estate definitions are.
+kevin robinson We try to make our videos understandable for all levels of investors. Hope you were able to get what you wanted out of it though! Thanks for listening.
mmmm!