My personal residence is almost paid off and I don’t have enough tax right offs to exceed the standard deduction, so I am looking into maybe acquiring a couple of rental properties. I do not have a lot of funds available, but I have about $250000 in equity in my house and A-1 credit that I would like to keep. My question is, can I tap into my equity with a line of credit for a down payment on a 3 unit property and borrow enough to pay off the equity loan with the rental property mortgage? I owe about 20k on my house and what I really want to do is purchase two properties and borrow an extra 10k from each to pay off my mortgage. I don’t know if this makes sense to do or not, but I guess that is why I am asking. I just turned 40 and would like to use the next 15 years to acquire some properties and retire from my regular job and just manage my rentals for a job. Also, is there any classes that a person can take to get them off on the right foot? I do not really want to jump into this not knowing what I am doing. So far I have found a lot of good websites and have been reading a lot, but from past experience, I learn better from doing things rather than just reading, some sort of class would be great. I am not looking for a get rich quick scheme, just a good real estate class. Thanks for any help that you can offer.
Yes, borrowing your home equity for a down payment is a strategy that many have used including myself. The key, no matter where you borrow from is that you have a business plan/strategy. It sounds like you are going down the right path but you need to make sure you really want to be a landlord. It’s not for everyone. This site is good, but also check out mrlandlord and other landlord specific resources.
You have a good amount of equity in you home with good credit. Financially you’re solid. Your next move is to get educated on the rental property business. Check your area colleges for classes. I suggest you buy “The Millionare Real Estate Investor” by Gary Keller. It’s $25 and it explains everything very well. It also has proven models developed by interviewing 100 millionare Real estate investors. The models will show you how to get started and develop a plan of action,