How To Start???
I inherited a home that was paid for although its not worth a lot around 50k its a small 3bdr/1 bath. I have a tenent in it now renting for $572 a month. I wondering if I should get a equity line of credit and purchase a second property or use some other method. Please help.[ Edited by michaelgregg on Date 01/08/2004 ]
A HELOC (Home Equity Line Of Credit) is very good for discount purchases with cash. If you buy a property you can refi out the cash, rent or sell the now property, pay down the HELOC and repeat! The low interest rates and revolving line of credit that a HELOC offers is ideal for such an acquisition strategy. Just my thoughts.
-Ed
If you don't yet own the home you are in, you should consider living in one of your investments by buying a home. This way, you qualify for 3% or 0% down programs which you can probably pay for on your own without mortgaging your investment. If you feel like it and you dont mind the hassle, you can buy one to four family homes this way, meaning you can buy up to a fourplex for 3% down or less so long as you claim to live in one of the units, and let the other units earn you a return.
Then, you can borrow against the house for another investment property. You can borrow maybe $40K and get in about $200K worth of investment property (20% down minimum, often 25%).
Keep this tenant and this income though. $575 for a $50K value property is a fine return, especially with no mortgage.
One last strategy is to sell the house owner financed, so you are not responsible for the upkeep and insurance, and after six or twelve months and the note is 'seasoned' you can sell the note to a wholesaler and get paid or you can borrow against the note for future investment properties.
Thanks Guys! You have given me some great info and ideas.