So I'm trying to get my next deal started and will be using creative finance to fund the deal. My primary residency has close to $200k in equity so I plan to use it in either a HELOC or cash out-refi to complete a BRRRR deal. I also have about $20k in cash. During the refinance process I will take the cash out I invested and pay off the lien against my primary.
My challenge I'm bumping into is the fact that my significant other is not onboard with the idea. She thinks that taking out a 2nd mortgage is a huge risk and irresponsible. She believes it needs to be used for buying our next home or redoing our own home. I agree with her that a HELOC can be a huge risk if used irresponsibly or even if its a bad deal but used correctly it can be a huge jumpstart to my/our real estate career.
Does anyone have experience educating a significant other to get them comfortable with the strategy? She isn't interested in RE for context. Thanks for all the feedback!
Hey Ryan, I would say it depends on the context of your relationship with your significant other. Is her name on the current house that you own? How serious is the relationship?
That being said, happy wife, happy life. I wouldn't do anything until she is on board. I would show her exactly how it works and the potential risks/rewards with the BP Calculators. I would probably bribe her to read Rich Dad Poor Dad and see if she is more open to RE after. At the end of the day, it'll always work out, just gotta have the right perspective.
@Devin James Thanks Devin! She is on the deed of our primary and she's my fiance so pretty serious lol. Definitely want to get her onboard before moving forward. I think having her listen to Rich Dad Poor Dad is a great idea. She drives a lot for work so could be a great time to listen.
Appreciate your feedback!
I will share my experience. In 2019 I got a HELOC of $165K. After paying some debt, I bought two rental properties and paid cash. Paying cash for them was a mistake. I should have leveraged myself instead. Once I realized this mistake, I refinanced these two and bought two more. Although we are paying for the HELOC, property management, repairs, mortgage, taxes, and insurance, we still have a positive cash flow. In addition, the properties have gained $150K in equity. Not to mentioned that our tax bracket went from 44% to 12%. We are currently refinancing our primary home to reposition ourselves. We want to invest more in 2022.
At first, my wife was unsure of getting the HELOC to make the investments. I believe what changed her mind was introducing her to financial education. The BiggerPockets podcasts are a great resource for educating all of us investors. The fear of the unknown can paralyze mentally and physically. The Rich Dad Poor Dad book is a great read and start. Another favorite of mine is The ABCs Of Real Estate Investing.
Investing in real estate is the best thing I have ever done. Having my wife as a business partner has been extremely critical. If your wife comes on board with you, your financial future will be brighter.
@Ryan Arsenault Having been very happily married for over 42 years, my advice is to do your best to explain what you want to do and why. Explain the benefits and the risks.
If she's still not in favor, STOP. RIGHT. THERE. For a marriage to be successful, you must both be in agreement with each other's major life activities.
If she doesn't agree, let it go. Do not badger, cajole, harass or whine. And never, ever bring it up in an argument.
No financial deal is worth putting your relationship in jeopardy.
Although the relationship is indeed #1......, your wife has no right (in some way) to completely veto your financial plans. You are a team. (That is assuming that you have a solid written plan that has been reviewed and looks to be at least pretty realistic.) She will regret it one day if you don't give her some push-back. Get some friends who have some cred.......Investors, Contractors, Realtors, Bankers, Lawyers, Etc.....and have them talk with you both. If she is going to make decisions based on fear only, then that is sad....but at that point you really will have to back down......
This is all my humble opinion.
"That being said, happy wife, happy life. I wouldn't do anything until she is on board."
You also mentioned she is your fiance......AND her name is on the deed to the place you own now? Thinking long term, you should probably figure out sooner rather than later if she will veto most/all your real estate investing aspirations or not.
Good luck my man.
P.S..............for something like this my man you may want to temporarily shorten your last name and/or be vague about your location in your profile to the BP Community.......You've put your full name, company name and location here on BP and your significant other or some of her friends may not take to kindly to you putting "family matters on the street" like this :-)
@Ryan Arsenault I have some questions for you.
You said "I'm trying to get my next deal started." Will this be your first ever investment property? And have you ever done a BRRRR before?
You said "I also have about $20k in cash." Is that ALL of your earthly cash? Or is that in addition to your emergency fund?
I think it's perfectly reasonable for an SO to want to launch a real estate endeavor from a place of financial strength. $20K isn't a lot of cash. So it may less be about convincing... and more about strengthening your financial position. Then launching.