I am looking for some advice in terms of the financing strategy to grow rental portfolio. Now I have no mortgage debt on my primary house (market value 700K) and 2 investment properties (total market value around 480K), generating 3K gross rental income per month. I have a stable full time job salary and great credit score. If I want to buy more investment properties, hold for 5 to 10 years, and perhaps double my current rental cash flow per month. What are the best way in terms of financing strategy to achieve this? I am in Raleigh-Durham-Cary, NC area, and the local rental market is quite strong and solid.
In your position I would sell the two income properties you presently have to free up equity in light of the fact that rent to value is far too low. They can not produce positive cash flow long term. Second you should pull as much dead equity out of your home as possible with a HELOC. That monet is presently not earning it's keep and should be used to purchase additional cash flow properties.
Dead equity is practically worthless and needs to be forced to earn a return not simply be hoarded as equity in a property that is a liability (personal home).
Hi Thomas, I agree that I should using the equity of my home to get HELOC and invest in more income property. But you were also saying that I should sell my existing rental properties, and buy something with much higher rent to value. What types of income properties can generate a much higher rental yield? I have a full time job so I do not have much time to fix and flip houses. In my local market, it seems 6% gross rent to value is the norm for passive income investors.
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