Purchased my first property

Detroit, Michigan
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Purchased my first property

Arthur Hughes
New to Real Estate · Los Angeles, Detroit MI · Member since 2020 · 11 posts · 2 votes

I recently purchased my first property in Saginaw, Michigan...yes I know, LOL. However, this purchased was not for an investment as for more to get a place for my mother to watch over my grandmother as she begins to mature, as she puts it. Since oil and water does not mix, it was better for me to purchase a home than to add an addition to my grandmother's home with intent of my mother residing with my grandmother....sorry but let me get to the point.

I now own a home free and clear, single family, 3 bedrooms, 1 bath, 960 sqft. with an attached garage, semi-finished basement for 75K. I'm looking to now leverage this property to start my Real Estate journey, scale and grow, My question is: should I get a mortgage or apply for a HELOCK to pull some equity and start my journey in investing?

Thanks Art

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  • Christian EhlersBusiness Member
    Real Estate Agent · NH & MA · Member since 2021 · 457 posts · 291 votes
    4y

    @Arthur Hughes as with most investing questions it will depend on your goals. The typical wisdom I've heard is that a Heloc is going to be better if you want to use the money short term. For example you get a heloc on the home to use the money only when you need it, maybe to complete a flip project or remodel a rental before refinancing it, that way you can then pay the heloc off after and use the money again. 

    If you want to do a cash-out refinance then that would probably be for longer term use of the money, like using it for down payments on multiple other long term rentals, where you can't get the money back out as easily. Hopefully this helps give you some direction?

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    The line of credit can be used over and over again, and you only pay interest on the portion borrowed. As Christian said, it should only be used for a short-term loan so only borrow against it when you need cash fast but can pay it back fast (under a year).

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  • Arthur Hughes
    OP
    New to Real Estate · Los Angeles, Detroit MI · Member since 2020 · 11 posts · 2 votes
    4y

    Thanks. Great advice

    0Reply
  • Account Closed
    Real Estate Agent · Auburn Hills, MI · Member since 2022 · 45 posts · 67 votes
    4y
    @Arthur Hughes  based on your first thought I would absolutely consider a HELOC not the loan but the line of credit. The next question then becomes what exactly to do with the funds. Exciting opportunities, choose wisely. 
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  • Arthur Hughes
    OP
    New to Real Estate · Los Angeles, Detroit MI · Member since 2020 · 11 posts · 2 votes
    4y

    Thanks 

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