I currently have 7 properties all with 50% or more equity in them. I want to continue to purchase more properties but the local market is too high right now. In my opinion it will calm down in the next 5-8 years, at that time I want to be in the best position possible to take full advantage of the market. I am in need of some advice on what to do in the meantime. Weather I should pay down the loans I have right now so that when the time comes to buy I can refinance and take out the equity or do I take out the equity now while it's at its peak and hold it until the time comes. I can see pros and cons in both. If I take it out now I will get more money but I will be paying interest on it until it is used. If I wait until I'm ready to but I will not be paying interest on money that is just sitting there but at that time the market will be low and I won't be able to pull out as much money. Any advice is greatly appreciated.
If possible, I would search for markets outside of your current market for deals. That way you're adding to your assets and getting a good return. If you're only looking to invest in your market then you can always pay your properties down and perhaps put aside money for a down payment as well in the event a too-good-to-be-true deal appears so you readily have the funds to get it under contract/put 20% down.
I don’t like sitting on the sidelines waiting for the market to crash, since nobody knows when that can be. You may miss good deals while waiting, and more importantly, you will miss on making connections and getting a name out there for you as an investor that focuses on X or Y niches.
However, you can definitively do something to take advantage of this market (high valuations and easy access to money) and your situation (low LTV and hopefully good cash flowing assets and personal financials) without having to deplete your cash reserves paying down loans or reducing your cash flow by getting me loans.
I’ve recently been reaching out to local banks asking for lines of credits for my business. I got a $500k line of credit and I will probably get another $400k line of credit from another bank very soon. One of the lines of credit is thanks to equity positions, the other one is a guidance line of credit (I need bank approval before using it, but they already set the parameters for approval. As long as Infind deals thay fit these requirements, I can access the capital).
These are great products as they allow you to have access to capital when you need it, but they don’t cost you money if you don’t use it.
Patience is a small investors greatest asset. If a property doesn't meet your investment goals, it would be wise to pass.
@David Fernandez : I love the idea of lines of credit, Idk why I didn't think of that. It's the best of both worlds. Thank you.
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