Skip to content
Starting Out

User Stats

65
Posts
39
Votes
Amy Zemser
  • Investor
  • Kingston, NY
39
Votes |
65
Posts

Using your home equity to purchase rental units

Amy Zemser
  • Investor
  • Kingston, NY
Posted Jun 23 2015, 12:23

Hi BP friends, 

I'm a landlord in upstate NY looking for some advice about generating revenues to purchase another buy and hold.  

For the past few months, I've been reading a great deal about wholesaling (I even started blogging about my journey here on the BP site). I took an excellent day-long course on wholesaling here in upstate NY that was incredibly informative. But, in the end, I'm circumspect, and when I shared my hesitation with someone here on BP -- and shared the fact that I have about 250k in equity in my own home -- he encouraged me to put this money toward buying another rental property.  And to forget about wholesaling altogether. 

That's hard to do.  I've spent so much time planning for wholesaling.  But, okay.  

Can someone here explain the process of using home equity to buy a rental property in a bit of detail for me?  Or recommend some further reading on the subject? Forgive me if I have overlooked a vital BP post on the subject. 

Here's what I understand thus far (forgive my novice naivete): I take out 100k on my home and purchase a buy and hold for the same price that cash flows out enough to pay off the equity line, pay all rental costs, and provide cash on the plus side to reinvest in the next property.  Where I get a little confused comes next: How would a potential refinance go on the new rental property? And would I then take out another equity line on the new buy and hold to purchase the next?  If I think about this too hard I imagine myself holding up a mirror to a mirror where my eyes are rolling into the back of my head like a pathogenic animal and I'm trapped inside infinite regress...

I love landlording and want to build a rental empire that includes retirement income alongside a way to revitalize my neighborhood. But we're levered up on our 1 main rental property and I admit I'm pretty scared to take out $$ on our house.  Not that I wouldn't, but I need to spend some time reading and learning about how this scenario plays out in the long term.  

Thank you in advance for taking the time to proffer up insights. All best.    

Loading replies...