Real Estate Agent · Member since 2018 · 89 posts · 25 votes
Hey BP
I could use some help trying to convince my parents investing in real estate is a smart decision. I found out they have a ton of equity in their house and could easily take out a HELOC for a downpayment on a rental property, and still keep their house with a manageable payment after the HELOC is taken out. They live in Raleigh NC which has a great college scene, a growing market, and tons of new construction. They've never invested in real estate before and are worried about losing money.
What's the best way to convince them to take a risk on the market and look for a buy and hold rental property?
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Sean Ade. I would say if they don't want to let them be. I know people with a lot of equity in a house, and they do nothing with it. That's the right call for a primary residence in most cases (in my opinion). A HELOC is short term money, not long term money
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
7y
You haven't posted any information that indicates they WANT to invest in real estate. Do they? Just because they have equity in their home doesn't mean they should invest in real estate. Investing (even in real estate) has risk.
Realtor · Portland, ME · Member since 2015 · 655 posts · 552 votes
7y
Could you have a contract drawn up and use them as a private investor for your real estate investing? If they don't want to be involved in the actual investing of real estate or as a private lender, I would suggest doing your own real estate deal first. If you can show them that real estate investing works and you are making money from it, then maybe they will be more likely to jump in as well.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
7y
@Sean Ade, don't try to convince them. Show them a pro forma and explain how the numbers work. Compare that to other investments, like equities, and what the advantages of REI are. Then show them the risks and how they can be mitigated. Don't ask them for an answer right away. Let them sit on it.
Better yet, go out and do a deal yourself. Show them how it worked and why it was profitable. That will show them that it can be done.
Lastly, accept that they may never get on board. REI isn't for everyone.
Real Estate Agent · Member since 2018 · 89 posts · 25 votes
7y
@Jaysen Medhurst Thanks for the tip! I actually just closed on my first duplex in Portland OR at the end of 2018 which is what sparked the conversation. My mom is on board, my dad is really against it. His problem is he doesn't trust agents which is a tough hurdle to get over. I've tried walking them through a few deals on the BP calculator but I just don't know the Raleigh market well enough to speak on it for them.
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
7y
@Sean Ade. I would say if they don't want to let them be. I know people with a lot of equity in a house, and they do nothing with it. That's the right call for a primary residence in most cases (in my opinion). A HELOC is short term money, not long term money