I have 500k in equity in my house what should I do with it?

Question

I have 500k in equity in my house what should I do with it? currently My rate is 2.7% and with the rising rates and currently around 6.5% what should I do with that equity. I live in the Seattle/Bellevue WA market and houses are more thank 500k should I attempt a burrr? Im lost on what to do and this would be my first investment.

Nathan Gesner · Answer

Be wary of people offering to help spend your money.

Educate yourself on what a good investment looks like, then start looking for other markets that are more affordable and Landlord friendly. $500,000 won't go very far in Seattle. It can buy you four single-family homes in Ohio, West Virginia, Tennessee, Kentucky, and other states.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turner or The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the BiggerPockets podcasts. This will clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. BiggerPockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.

5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.

6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

Rob Bergeron · Answer

I didn't have as much equity as you, I ended up getting a heloc for $92k. I've since cast that out into five airbnbs (four BRRRR). Ours is technically a credit card product for the bank so we get travel rewards points, which have added up quickly on recasting the heloc. Ours also came with a debit card so it has been nice for furnishing the airbnbs as well. Turning my HELOC home into an airbnb as well that will pay for our next family home (getting married in Italy in September). Lots of great options! I'm team airbnb/BRRRR and team never sell (only sometimes). lol

Dave Skow · Answer

@Andrew Kirschner- if you havent already done this - get a HELOC for the max amount on your home so that you can use this for any future projects ( if desired)

Kory McCain · Answer

Would get a HELOC for sure...low cost to open and there if you need it. Just inquired with my local Credit Union for my Primary as well.

Aj Parikh · Answer

The best strategy would be to take an HELOC on the property and buy multiple turnkey properties in the midwest and scale your portfolio. Feel free to connect if you want to discuss.

Muhammad Abdullah · Answer

Have a well vetted plan before you touch it!!!

What do you know about a SBLC? Leverage your funds 4(x)

Strongly recommend an end game first!!

Eliott Elias · Answer

Take a HELOC and close on your next investment property. Now's not the time to cash out refinance, rates are horrible

Trevor Oldham · Answer

You could pull some of that equity out to start passively investing in real estate. I'd recommend checking out Left Field Investors for some great resources.

Ricardo Hidalgo · Answer

Depending on your strategy I would pull a heloc and start flipping properties to increase capital or hold until you see a better buying opportunity for the future.

James Dainard · Answer

Hey Andrew,

What's your general investing strategy?

If you're looking for a true BRRRR you're going to want to look a little further out just so your capital investment goes a bit further. Would love to help you figure out how to mobilize that equity. DM me with any questions!

I have 500k in equity in my house what should I do with it?

I have 500k in equity in my house what should I do with it?

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