What would you do if you had $150+k in equity?

8 Replies

I am starting off the new year and really want to get build my wealth in a better way.

I've got several properties (including my own house) paid off free and clear for over a decade. I'm 45 years old.  I chatted with a friend who said I should refinance, take the money and use it to buy more properties or even re-invest in other channels.

From rental properties alone, probably about $150k in equity. That's not even including a HELOC which I can get from my own residence which could be another few hundred thous.

I'm not a big buy and hold guy, although I do have about 3 properties, but I am not the guy who wants to have 10 properties and deal with the headaches.  Yes, I can hire a property management company but I've had bad experiences with them and the cash flow really got eaten up by all of their fees and rehab overspending.  I'm not a handyman type of person to do it myself either.

What would you do if you could leverage the current properties and use the money to make even more money?  Ideas: 

* re-invest in higher yielding avenues (like which index funds, etc),
* be a private lender to other investors and charge a high interest rate (obviously I'll need to perform my due diligence when borrowing this money),
* buy more properties with low maintenance and try a better prop mgmt company
* try getting into commercial properties (I'm new to this)
* I've heard about buying discounted notes???
* buy a house cheap, take title for 90 day seasoning, then retail for a higher price profit? (I haven't really done this before b/c I didn't like dealing with contractors and fix-ups too much)

Anyway, what would you suggest so that I can grow and build wealth even faster without a lot of headaches. I understand if you are not a financial advisor and I know it's just your opinion but I'd like to get your thoughts.  I plan to also consult a financial planner as well but since I've been doing real estate investing for over 10 years, I have a particular inclination to using real estate to build wealth.

Thank you for your time!

God Bless

Rob

First, I wouldn't refi your own home if you didn't have to...and having to is a last resort with a foolproof strategy to pay it back ASAP.

Second, you said you have accumulative $150k in your rentals. How? What are they individually and what are the ARV's for each. This could very well be your ticket to the destination you desire.

Thanks Joe for your inquiry.  All my properties are tenant occupied and great condition

Property #1: Retails for $50k, Rent $727/mo
Property #2: Retails for $55k, Rent $743/mo
Property #3: Retails for $100k, Rent $920/mo

I am being a bit conservative with the values because they could be worth more; I'm pricing them b/c they are for quick sale if I needed to. My credit score is 807 too, btw

@Robert L.  1st, make sure you use the "@"  and the name of the person (found below the post once you start the "@joe...", or the person you are directing you comments to may not know it.

2nd, What is the equity in each of these properties?

3rd, where are these properties?

Originally posted by @Robert L. :

I am starting off the new year and really want to get build my wealth in a better way.

I've got several properties (including my own house) paid off free and clear for over a decade. I'm 45 years old.  I chatted with a friend who said I should refinance, take the money and use it to buy more properties or even re-invest in other channels.

From rental properties alone, probably about $150k in equity. That's not even including a HELOC which I can get from my own residence which could be another few hundred thous.

I'm not a big buy and hold guy, although I do have about 3 properties, but I am not the guy who wants to have 10 properties and deal with the headaches.  Yes, I can hire a property management company but I've had bad experiences with them and the cash flow really got eaten up by all of their fees and rehab overspending.  I'm not a handyman type of person to do it myself either.

What would you do if you could leverage the current properties and use the money to make even more money?  Ideas: 

* re-invest in higher yielding avenues (like which index funds, etc),
* be a private lender to other investors and charge a high interest rate (obviously I'll need to perform my due diligence when borrowing this money),
* buy more properties with low maintenance and try a better prop mgmt company
* try getting into commercial properties (I'm new to this)
* I've heard about buying discounted notes???
* buy a house cheap, take title for 90 day seasoning, then retail for a higher price profit? (I haven't really done this before b/c I didn't like dealing with contractors and fix-ups too much)

Anyway, what would you suggest so that I can grow and build wealth even faster without a lot of headaches. I understand if you are not a financial advisor and I know it's just your opinion but I'd like to get your thoughts.  I plan to also consult a financial planner as well but since I've been doing real estate investing for over 10 years, I have a particular inclination to using real estate to build wealth.

Thank you for your time!

God Bless

Rob

 Rob,

I'm not sure what your friend knows or doesn't know about real estate or investing in real estate, but from your post I see that you're not handy, not a buy and hold guy, don't like being a landlord (or property managers), but are inclined to use real estate to "build wealth faster without a lot of headaches." 

You do have many options (the ones listed along with many others),  but I'm not sure these are compatible goals and expectations.  I recommend you consult with someone who can evaluate these assets and help you develop a plan that realistically meets your goals on a risk adjusted basis.

Medium metro logo 14 12 22 largerWilliam Byers, Metro Retro, LLC | [email protected] | 904‑710‑9871

Originally posted by @Robert L. :

Thanks Joe for your inquiry.  All my properties are tenant occupied and great condition

Property #1: Retails for $50k, Rent $727/mo
Property #2: Retails for $55k, Rent $743/mo
Property #3: Retails for $100k, Rent $920/mo

If your properties are all free and clear, you may have just retired...and don't know it yet.

With your credit score, you should be able to refinance all three of these deals.  Based on my sources, here is what you might be able to do:

Property #1: Retails for $50k, REFI (75%) = $37,500 = $185/month payment

Property #2: Retails for $55k, REFI = $42,250 = $203/month payment
Property #3: Retails for $100k, REFI $75,000 = $369/month payment 

Based on these added costs to each of these properties, what would they do to the properties Cash Flow? 

REFI cash back total = $155k +/-....and,.... 

AFter you use this cash for your next deal(s), you can refi those too, and reuse the cash again, and again, and...

@Joe Villeneuve  

Awesome assessment.  One of the things I was going to do was to talk to a banker to partner with me on this--any suggestions on which kind of banker to target?  I can start with my local credit union bank that already know my assets, but wasn't sure if I should be talking to someone else who better understands this approach.

As for your question what it will do to my cashflow?  After all expenses + new mortgage, my cashflow for each of the 3 properties is going to be about $300/mo.

So what you're saying is with the REFI money I can just "reuse" the money and grow the cash to buy more and more properties to build a portfolio of properties?  

To "retire" I will need to build a substantial enough portfolio of houses and have property management take care of it (unless I do it myself), correct?

@Robert L.  

Q:  any suggestions on which kind of banker to target?
A:  Banks usually will have lower limits on how many times you can do this.  I have banks I use, but I also have a private broker.  Through that broker I get more access to a variety of programs...and my limit is 10 loans in my name.

Q:   I can start with my local credit union bank that already know my assets, but wasn't sure if I should be talking to someone else who better understands this approach.
A:  Many on this site, and I understand this approach.  I wrote a book, and designed a system around it.

Q -  (OK, more like a statement):  As for your question what it will do to my cashflow? After all expenses + new mortgage, my cashflow for each of the 3 properties is going to be about $300/mo.  
A (OK. more like a comment):  "We have a winner!!"

Q: So what you're saying is with the REFI money I can just "reuse" the money and grow the cash to buy more and more properties to build a portfolio of properties?
A:  YES.  You will have a limit on how many times you can do this, based on your lender(s).  Once you reach your limit, there are many ways to keep going.

Q:  To "retire" I will need to build a substantial enough portfolio of houses...
A:  Fewer than you think.

Q: ....and have property management take care of it (unless I do it myself), correct?
A:  I analyze every deal with a PM in place.

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