Hello BP this is my first ever post and I'm ready to start my real estate investment journey. My goal is to house hack a multifamily property in the Greater New Haven area of Connecticut. I plan on doing this with a FHA loan but I was wondering about the best course of action to free up cash to invest for my down payment. I have both a taxable and retirement stock brokerage account and I was considering selling off enough in my taxable account for a down payment but I understand I will have to pay capital gains on any profits made. Is there a way to borrow against my stocks without being margin called or can can I possibly use my stocks as collateral and if so how would that work? Thank you for any help that can be provided.
Rental Property Investor · Raleigh, NC · Member since 2016 · 393 posts · 995 votes
4y
A select few brokerages allow you to take loans out against your stock portfolio. M1 Finance for example allows you to instantly borrow up to 35% of your portfolio balance with no credit check, no application process or anything like that, you simply hit the button and funds are in your account in a matter of minutes. There is no set repayment period since the monthly payments are interest only, so you could theoretically make interest only payments for decades before finally deciding to start working on repaying the principal balance. Not only that, but those payments can be made manually, or they can simply deduct the interest payment from your portfolio balance so you never have to worry about missing a payment, (dividend payments from stocks are an easy way to cover the interest charges). Interest rates fluctuate, but I've been paying 2% on my loans with them. The biggest risk is if the stock market crashed hard enough, and your portfolio balance dropped below a certain point, they could issue a margin call and require you to deposit additional funds or they would start liquidating your account.