Say you have 10 properties that are producing income of $2500/month + cashflow .You started your ventures with $0 by aquiring a few no money down deals.Then selling one and reinvesting that money.Now you have your 10 properties with good cashflow but no capital to continue and the no money down deals are just too far and few between. But there are some great deals on the market.Do you : A) take an equity loan on a piece of property B) Sell a piece of property C) Borrow the money from a hard money lender again ;( D) none of the above
u forgot E): ANY of the above, and then some.
Thanks TonyDicorpo,
All are viable options I was just wondering what the majority of the mass considered the least risky or expensive?
running out of money is a problem that lots of new investors run into. getting a mortgage to acuire a property can cost 3 or 4 thousand out of pocket in closing costs and prorated taxes + insurance. but there is a better way! if you can find the means to pay cash for a house by borrowing the money from the bank, family, friends, or credit cards, then you can avoid closing costs. after you own the property free and clear, dont refinance it, but instead get a home equity line of credit. using a heloc has 2 main advantages, you avoid paying thousands in fees, and you can draw against the line when you need money. so you wont have to worry about running out of cash. also, helocs are interest only, and if you keep the house as a rental and use the positive cashflow to pay toward the principal balance, your monthly payment will decrease and your cashflow will increase. using this method you can have a house paid off in 5-10 years, depending on the principal balance and the cashflow.
wil817 ,
excellent answer thanks for the knowledge really really helpful.We bout our first fixer with an 18% rate on a credit card cash advance and it worked but am trying to think of other ways more economically .Thank you again I may need more detail but am thinking right now.
what bout putting some money in my pocket instead of paying the principal and selling in 5 years this will give me + cashflow for 5 years and hopefully the house appreciated a little and I get a little lump some in my pocket then too?
sure you could sell it, but if you pay toward the principal in the mean time, you can save on interest, and you can always draw the money from the line when you need it. as far as 18% on the credit card, often credit card companies have balance transfer offers, like 0% for 12 months or 4.9 until the balance is paid. just call the company and ask if they have any balance transfer specials this month.