A lot of people want to buy real estate, but they don’t realize the true investment power they may have.
For example, have you considered pulling out home equity in your home and deploying that cash to buy other pieces of real estate?
Say you want to buy investment properties and don’t have a lot of cash in the bank. Refinancing your current residence and pulling cash out may be a viable option.
If you wanted to invest in single and multi-family residences, you could sell your home or refinance to pull money out to buy five single-family or multi-family residences priced at $100,000 each. You pull $100,000 out on your residence and you put $20,000 down on each of these investment properties, and then get financed for $80,000. A multifamily property has four doors with four dwellings, meaning there are four families that may pay you rent. If you purchase a duplex with four dwellings and put your 20 percent down, then you have four monthly payments – increased cash flow.
In a way, you are using other people’s money (the lender) to help you increase your cash flow. If you are in the proper financial standing to make a move like this (your debt-to-income ratio is under control, you have good credit and you don’t currently have a lot of loans outstanding), then you would be entering a debt scenario that may considered “good debt.” Having investments in real estate is considered adding to a mixed portfolio and may be classified as good debt, unlike credit card debt or car loans. You may even end up getting some tax breaks on this type of investment.
Do you have questions about how you can increase your cash flow by pulling out equity and investing in real estate? Give me a call and I can walk you through it all!