I need some advice on getting started with purchasing a rental property or two. I’m thinking of pulling some equity out of my home to purchase a rental home. A little info:
Just my wife and I, our home has been appraised at $420k, we owe $145k, 4.5% APR, about 12 years left. We’ve purchased the home new in 1994.
I’m thinking of re-financing our home and pulling out $100k. I would take that money and put about $25k into a remodel on our current home, and take $12k and pay off a car loan. Paying off the car would free up $600 / month. I would then have about $60k to put down on a rental, or $30k on two rentals. A positive cash flow is a must.
I know I’ll be sacrificing my current low interest rate, but at the moment I’m getting raped on taxes as I have virtually no write-offs. My wife and I currently claim ZERO deductions and still pay extra to the government every month. There has to be a better way. I’m 90% thought “Rich Dad, Poor Dad”, and I need to learn how to “make money”. I’ve thought about a HELOC but most of these are variable and I really don’t want to increase my monthly expenses. The refinance would lower my payment if I went 20 or 30 years.
I plan on registering a business very soon and will start tracking expenses as I start this endeavor. I’ve been reading these forums and searching for properties, but I really can’t act on anything until I have some cash in hand, so I’d like to get this financial issue resolved.
Comments and/or advice would be greatly appreciated.