How to leverage home equity

2 Replies

Hi guys,

I'm a new investor. I currently own a single family rental which has approximately $100K in equity.

What is the best way to go about leveraging this home equity to purchase my next investment propery, a duplex?

@Dave B. Visit banks for a Home Equity Line of Credit (HELOC). The bank will appraise your home and give you a line of credit (if you qualify). Writing a check from this account, you may make a downpayment on the purchase of a duplex. This is leverage. It costs 4% interest, or so. Include this expense when figuring cash flow of the duplex. When the day comes that the duplex has enough value (equity) you refinance the duplex with a new note, at the higher value, pay off the original note and the HELOC loan.