Should I get a loan on my paid off duplex?

Question

Matt Popilek · Answer

My biggest question would be what type of return are you going to get on the addition.

My initial response is I would get a loan on the duplex that is paid off in order to reinvest the money into another deal. Since the equity is not helping you gain anything outside of security if you are comfortable with a little of risk on the property you could leverage to increase your income. You are currently only making $416/month on the duplex so that should be taken into consideration on what size of loan you take out.

If you take out a loan would the money be better spent on the addition, or would it be better spent on another property? Which would give you a better return on your investment?

I have personally dealt with this thought as I have a duplex and the third floor is an attic space that would rent for $8000/month. The renovation would cost $25k.  Every time I go to finish that project I look at my options, and every time thus far I find that the $25k would be worth more to me if I deployed it into another property rather than finishing an addition.

If you are growing a rental portfolio for passive retirement income the most important question (per my opinion) is if I borrow X what will I get in return?

Hadar Orkibi · Answer

if you borrow the money off your house, what would be the return after you service the new debt?

How much dose the duplex worth?

How big is the loan you are going to to take of the extension?

What would the extension cost?