I have approx $160000 in equity on our rental property, it used to be our primary home, converted to a rental when we bought a new home
I was told the equity I have in it is dead money and if I wanted to really start investing in rental properties I should pull the equity to purchase 1-2 more rental properties
Im a landlord by mistake honestly but Ive learned enough to make it work for nearly 3 years.
I really want to start learning as much as I can and become a successful real estate investor and landlord
Question 1: what would you do with the equity I have in my rental? Use it to buy more rentals or leave it so I get my rental paid off (approx $76000 left to pay)
Question 2: what was your first real estate investor reading material that really helped you learn the ins and outs of being a landlord or real estate investor or both?
Account Closed You need to do what works for you, not what works for someone else. There are many different ways to invest in real estate.
Some people will pull the equity out of their property to invest elsewhere. If you do this, look at the cost to refinance and if it makes sense financially with your property. Your mortgage rates will increase while your rental income remains the same. Others would rather pay off their properties or should I say let their tenants do it for them and leave the equity build in the home. It doesn't mean that you aren't buying other investment properties as you can save your money and use those savings to buy other properties.
One other thing to think about is financing. If you keep pulling your money out, your debt will be higher and it will affect what type of loans you can get and if you can get a loan.
I am assuming the property is a single unit? You could cash out an LTV of 75% with it being a rental.
As long as the rental income can support the new payment, and you will overall increase your cash flow with the new purchases, I would say it is a great idea.
I personally have used equity in rentals to purchase more rentals, and then ended it with our current primary.
Technically, you will make more money by using that equity to purchase more cash-earning properties. But that comes with some additional risk, i.e. the loan on the property. It depends on how many properties you want - in theory, you could keep using that same equity forever, or close to it.