i have equity, and credit cards

I live paycheck to paycheck(currently paying down some credit card debt $15K, I have no cash(actually $157). I do have $30K in my 401K. And i have about $150K in equity on my house. I also have about 50K in credit line. I was seriously thinking of using my equity to buy my first investment property, but after reading some posts on here I have second thoughts. I have a wife and 2 kids. so it’s pretty obvious why. What about using credit cards/ Or should i just buckle down and just keep on paying my debt down and save money until i have enough for my first property?

personally, I would get a new credit line up to 90% ltv. Its cheaper ,money and it dosent hurt your credit score like charging up a credit card. you can always payback the equity line with the sale of your properties, or if you keep them as rentals, get a cash out refi. Keeping your credit score up is vital, it opens doors not available to those with low scores. Use the credit cards only as a back up to your equity line.

i will definitely look into it. Thanks for the info

What you would like to do is possible with all the various equity and credit you have. just be sure to look out for any thing that may come out of no where. Living paycheck to paycheck is rough, I know cuz I have been there too like most people have. Investing money is a way to get out of that, but at the same time it can set ya up for fall when you are already in a bad spot.

Just saying that to make other new investors think hard about going beyond their means.


Go and talk to your banker. Lay it all out on the table. Get his advice and then make a conservative decision. I have done this in the past and it really helps for a reality check. Most banks are pretty conservative and give conservative advice, so use that as you benchmark, then do what makes sense.
I read a blurb on another site that said something like:
We dont use our own credit.
We dont use our own money.
We don’t personally sign for anything.
we don’t assume a debt that makes no money.

Surely, that is why we got into this, and surely there are those that are doing that. The trick is to educate oneself and repeate it.

Best of luck

Sean 8)

I hate to put my primary at risk. Money is a commodity that is easy to find, ya just need the right formula.

50k purchase 65% of market value use hml money(value 75K)
80k cash out refi upto 90 % of the ARV 30k in repairs will increase value by 75 % (market value 130 ARV)
Sell After renovation 120day’s at 130
your take 50k
after paying off HML and closing costs what not there is still a healthy profit 35-40k easily and you did’nt reach into your own pocket at all.

Look folks these are crude numbers just to make a point but conceptually it works well. still do your due diligence on the property and financing!!! It has to make sense! Also talk to your HML and negotiate repying him within 30 day’s of acquisition and he probably will cut fees and penalties if you get him his money back quick!!!

Thats a great example, I just think if you are living pay chech to pay check and the house does not sell…you need to ready for that aligator eating out of your back pocket.

Sean 8)

I have the same problem, living pay check to pay check. This is what I did, got a fixed rate %5.81 ( $60000) paid off my $40000 varible line of credit and paid off $5000 in credit cards. taking the extra $15000 and putting in the bank just in case ( bought home next door from me for rental) . the extra money in the bank will ease my mind and also help me make extra payments on this loan which is for 15 years, hoping to pay off in 6 or 7. also daughter needs braces so on and so on… hope this helps … oh if you have a flexible rate on your loan , be careful interest rates are going up up up …

One alternative for paying off the credit cards is a loan against the 401K. Most plans allow you to borrow up to 50% of the value at excellant rates and my all the money back to yourself.

In the meantime do NOT buy an investment property. Learn how to find good deals. Develop the contacts and marketing materials you need. Include some knowledge with this. Especially what to stay away from.

As you find the deal sell to to someone else for cash. The time will come when there is a killer deal. Then you can consider doing it for yourself.

yes you are paying yourself back by borrowing from a 401 but…you are paying it back with after taxed money, so you are paying interest plus being taxed 25 % …not a good idea

Slofizz, If I was you I would look into income producing properties, properties that sustain them self. Single family homes are sometime a good investment but pretty risky. The what if, are what will hurt you, especially when you are putting it all on the line. Look to the next level MULTIY FAMILY you may not need as much of a down payment as you think some investors can get up to 100% financing on them. Think of this 1 income producing investment home, with one renter. What happens when that renter moves or defaults? Now thank of this 25 units, 1 move out how many are left. INCOME PRODUCING PROPERTY IS THE KEY, and it easier then you thank especially with the kind of down payment you can come up with.


You’ve got a lot of options, but all options are not created equal. First of all pay down, don’t pay off, your credit cards below 50% of credit limit. For example, if you have have a credit card that has a $10,000 limit and it is maxed out or almost, pay $6000 off. That would keep it down to 40% of the credit limit. With $30K in in 401K and a credit line of $50K, you have no business touching your home at this time. Use your 401K and credit line for investing, if you must ue your money. Your can always buy properties creatively using little of your own money. As a rule, don’t invest more than 50% of cash (that’s 401K and credit line combine).

Best options are to get an equity loan on the house, or refinance the mortgage with cash out to payoff the credit cards. Rates are still good, if you have solid credit you have many options. What is the rate on your 1st right now? With an equity loan, or refinancing the first you can save money monthly and any interest you pay is tax deductible if you itemize taxes unlike the credit card interest.