Home Equity Loan from First Investment

[Israel R.]

I have an investment home that is worth 430K. Its equity has doubled in the last four years. Should I take a home equity loan to take money out to invest in a new property? I would really like to by a MFR, but I am not sure it that's a good Idea. I am looking to invest In Indianapolis, IN, since the market in California is so expensive. Any suggestions?

[Account Closed]

Originally posted by @Israel R.:

Hi @Account Closed, I agree that their might be some opportunities here in California. Part of the reason I considered Indy was because the amount of money needed to put on down payment as well as other states like Indiana are more landlord friendly rather than California, which tented to be more renter friendly. But I agree with you there are still areas in California that still have the opportunity to make money. I just have to research those cities here.

 See, I don't think CA law is unfair to either side.  CA law is not different or more strict than most other states.  It's not difficult to work within the law, and doing so will not cost you profits, in my opinion.

Rent control is another beast entirely, but that's also not just CA specific.  Talk to landlords who deal with rent control anywhere in the country and they will tell the same story.  But, only a few cities in CA have rent control.

I don't know if one state will have easier lending laws than another state.  I doubt that, too.

Let me give you a thought.  I managed a building next to a university in Santa Clara, CA.  We discovered that even when the economy tanks, students still go to college and still need housing.  As long as your property is near a stable college, there will be a need for your units.

So, what about finding a multi-family building near a university?  The niche I found and loved was law students.  But, most grad students will be great.  Undergrads, not so much - or they will be higher maintenance and more damage. 

There are stable universities in affordable areas in CA.  I'd start there.  And, if possible, look for one with a medical program or a law school.  Med students or law students are great.  They're quiet, they don't cause damage, and they often stay for several years.

People like to think that CA is over-regulated on every possible issue, and is overtaxed on every possible thing.  But, that's not true.