196: Rookie Reply: How to Use Home Equity to Buy Rentals

Real Estate Rookie

BiggerPockets

Entrepreneurship, Education, Investing, Business, How To

4.7 • 1.8K Ratings

🗓️ 2 July 2022

⏱️ 13 minutes

🔗️ Recording | iTunes | RSS

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Summary

This week’s question comes from Tony’s Instagram direct messages! This rookie real estate investor is asking: I have a good chunk of equity in my home, should I pull out cash to purchase a rental property? If not, what should I do with the equity? If you want to know how to use home equity to buy real estate, you need to know your options first. As many homeowners are sitting on massive equity gains, thanks to the past two years worth of price run-ups, they’re asking how they can use this equity to their advantage. For most investors, you’ll have two options in how you take this equity out of your home’s value. But, both of them need to be intelligently evaluated before you make a decision. Here are some suggestions: Look at your current mortgage rate and see if it’s higher or lower than today’s average interest rate to refinance Ask your lender about a HELOC (home equity line of credit) as well as the terms, interest rates, and duration offered Interest rates are likely to rise, so locking down a great rate now may help you in the future Know your exit strategy (flip vs. BRRRR vs. buy and hold) for each different kind of financing option And more in the episode… If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE). Links from the Show Real Estate Rookie Podcast Real Estate Rookie Youtube Channel Real Estate Rookie Facebook Group BiggerPockets Forums Check the full show notes here: https://www.biggerpockets.com/blog/rookie-196 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Check out our sponsor page! Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	This is Real Estate Rookie Episode 196.
0:05.1	My name is Ashley Care, and I am here with my co-host, Tony Robinson.
0:13.5	And welcome to the Real Estate Rookie podcast, where every week, twice a week, we bring you
0:17.8	the inspiration, information, and motivation you need to kickstart your Real Estate investing
0:22.8	career.
0:24.1	And I love Saturdays because we get to switch things up a little bit, right?
0:27.2	We get to diving to some of these questions.
0:29.6	But before we do, Ashley, you sell us what's new with you?
0:31.5	What's going on?
0:32.5	What's new in your neck of the woods?
0:34.0	Um, not much, actually.
0:37.1	The last couple of episodes, we talked about my knee surgery.
0:39.7	We talked about a new deal I'm looking at.
0:43.8	So yeah, really, nothing else new than I can think of, um, what about you, Tony?
0:49.4	Yeah.
0:50.4	Um, for me, we actually just lost out on a, uh, on a property.
0:55.2	Um, it was in a new market that we're looking at, and, uh, we put a $20,000 RMD, and,
1:01.9	um, everything that was going on, and it's this new construction, and the way they set
1:05.9	it up was that you had to get, uh, a loan to purchase the land, and then you had to get
1:11.9	a secondary loan to cover the construction.
1:15.1	Um, so it was like really weird how they had it set up.
1:17.7	Um, but, you know, with everything we had going on, we like totally dropped the ball
	...

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