Building capital to buy and rent properties
I currently have two Single family homes in Philly. One is being rented but I barely get any profit and the other is being renovated and is owned free and clear. I want to continue to buy rehab and rent to create more income for my family. Is it better to use the banks to build capital? I am thinking of using a Heloc or cash out refinance. Any suggestions?
I would recommend getting a heloc or cash out refi on the property you own free and clear. Put your equity to work. The other option I would recommend would be to sell and buy several properties if possible, to really accelerate your real estate journey. It's hard to say what's better without knowing more details. This could be a great question for one of David Greene's, Seeing Greene episodes.
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Quote from @Stephanie Cortez:
I currently have two Single family homes in Philly. One is being rented but I barely get any profit and the other is being renovated and is owned free and clear. I want to continue to buy rehab and rent to create more income for my family. Is it better to use the banks to build capital? I am thinking of using a Heloc or cash out refinance. Any suggestions?
Whether you decided to save up more capital to acquire more rentals purely from disposable income, whether you pull a line of credit or loan from your free and clear rental, or your primary residence I’d first identify what your end goal is and figure out what that looks like before you decide how.
There are many ways to reach that vaunted 10k per month income figure from rentals and some are quicker and some take 2-3 decades.
One bit of advice is to find someone who already has what you’d like to achieve and tag along with them to show you their path (one option amongst many, but at least it’s a proven model).
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Stephanie - In addition to HELOC and cash out refinance, I would also suggest consider using OPM (Other People's Money) with some private investors. For example, if you find a great BRRRR deal, but don't have the funds perhaps there would be a freind/investor that would loan you money in the short-term (9-12 months) while you buy, rehab, and rent the house. When you refinance you can pay the investor back. Of course, this would be dependent on finding a few investors that are interested, but the more comfortable you get with taking investors money the quick you'll be able to scale your portfolio and not rely on only bank money or HELOCs. Good Luck!