HELOC Explained | Buy MORE Rental Properties Using Your Equity

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HELOC Explained | Buy MORE Rental Properties Using Your Equity

Рет қаралды 17,521

Күн бұрын

Do you want to buy more rental properties? Once you have the HELOC explained, it starts to make sense why so many real estate investors use them. If you’re not an investor, you may have never thought about getting a home equity line of credit (HELOC). But, if you’re trying to quickly scale your rental property portfolio and start stacking units, the HELOC can be your best friend. Not only is a HELOC almost instantly accessible, it also gives you ultimate freedom in funding your future flips, BRRRRs, or regular rental property purchases.
Tyler Madden used a single HELOC to buy seven rental units, proving how great this strategy is. Even if you don’t have a ton of equity in your home, there’s a chance that you could use some of the principal you’ve paid off to help you fund your next down payment, rehab, or repair for another property. This means you won’t have to ask private or hard money lenders for a loan, and by default, skip out on their high interest rates and big fees.
But before you call your local lender and ask for $100k of equity as credit, hear out Tyler’s pros and cons. There are some things about the HELOC that you should know before you apply for one, as a HELOC is a bit different than a traditional loan. But, if you have equity, and want to grow your rental portfolio, this is a strategy to keep on your radar.
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Check out Last Week’s Episode on Value-Add Real Estate:
• Why Value-Add Real Est...
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HELOC vs. Cash-Out Refi: Which is Worth It In 2022?
• HELOC vs. Cash-Out Ref...
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How to Use a HELOC to Buy Real Estate:
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How I Went From 3 to 20 Properties Using the Power of Home Equity Loans:
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Connect with Tyler on BiggerPockets:
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00:00 More Rentals for Less Cash
00:31 Using HELOCs to Buy More Property
02:09 How a Home Equity Line of Credit Works
03:46 Where to Get a HELOC
04:53 How to Use a HELOC
07:01 Pros and Cons of Using a HELOC
08:36 Got Equity? Go Buy Rentals!
#biggerpockets #realestaterookie #tylermadden

Пікірлер: 41

@TheFirstRealChewy Жыл бұрын

Buy house #1 (paid off). Buy house #2 (financing). Rent house #1. Remodel house #2 w/ HELOC. Refinance house #2 and pay off HELOC. Build equity in house #2 (paid off). Use HELOC for house #1 and #2 to finance two rental properties #3 and #4. Use income from new rental properties #1 #3 and #4 to pay back the HELOCs and pay mortagages for rental properties #3 and #4. If #3 and #4 were also brrrrs, then cash out refinance those to pay back the HELOCs and the rental income pays the higher mortgage for #3 and #4. You are essentially doing a brrrr using a HELOC instead of a fixed pool of money. The benefit is that you leverage the equity of your existing property instead of directly using your pool of money. Sure you will pay variable interest on the HELOC until you pay it back, and it carries greater risk, but it can get you to start with less money in the bank. Even if you have money in the bank you can use that for emergencies so that you dont have as much money being lost to inflation. Like a typical brrrr, as long as you have enough money in case of emergencies you should be fine.

@veronicamullins9954 2 жыл бұрын

Got a HELOC In May 2022 bought first property cash! It was the right opportunity at the right time

@eplay2121 Жыл бұрын

How did you find the property

@ShizzieShizz73 Жыл бұрын

How much!!

@chaselesser3191 Жыл бұрын

May 2022 was close to peak home prices. Wasn’t it.

@dcc9345 2 жыл бұрын

Heloc rates are variable and the risky thing is that the Fed isn't done raising rates..

@TheFirstRealChewy Жыл бұрын

You still pay loan financing/originating fees. So you still pay to create the HELOC, when you take out a mortgage on the new home, and when you refinance that mortgage to pay back the HELOC.

@joeapicelli8367 10 ай бұрын

I owe nothing on my home. Interest rates are approaching 8% Is now a good time to get a HELOC?

@lookatthetrees7494 Жыл бұрын

Thanks for this information!

@brianifitness3656 Жыл бұрын

Great video! I got a sizable HELOC. Not sure what to do at the moment though.

@121212aslan 7 ай бұрын

I was told that I can only get a heloc at the same bank my mortgage was done at. Is it true?

@johnlewisofficial Жыл бұрын

Great video Tyler.

@meganmiller9752 Жыл бұрын

We bought our tiny home with cash a few months ago it's still .being built.

@nicksantangelo9083 Жыл бұрын

Do you recommend helocs just for the brrr method? I just tapped into a heloc on my primary an went half on an str 4 bedroom 2.5 bathroom that cash flows $3,950 a month an sees $1667 in profit. So I get $833 A month In profit. Also have another STR that nets me $867 a month. I throw about $800 a month back towards paying down my heloc an still see over $800 a month in passive income. Is that a smart strategy in your opinion?

@j.lupebarba1179 10 ай бұрын

I do have equity in my properties

@Lynaka1 2 жыл бұрын

Thanks for a great video! Would you use a Heloc as a down payment on an investment property? Not a BRRRR or fix and flip?

@Junior8p1 2 жыл бұрын

I did recently with the intention of paying it off on 2 years or less

@ashleyturner7543 2 жыл бұрын

Same, I used my HELOC to purchase investment properties.

@Lynaka1 2 жыл бұрын

@@Junior8p1 what strategies do you use to quickly pay off your Heloc?

@Junior8p1 2 жыл бұрын

@@Lynaka1 I use cash flow from my other properties but mainly earned income from my W-2.

@gonoenriquez26.2 Жыл бұрын

What is a short term loan for you guys? 2-6-12 months?

@farhadsenzai7890 2 жыл бұрын

myspace?!?

@applechili2848 Жыл бұрын

Smart strategy & great implementation. There are even better options; however, this is solid! If it’s not broken, then keep doing this. What if any tax implications have occurred with regards to buying these properties? Liked & subscribed!

@dev2times 5 ай бұрын

What are better options

@applechili2848 5 ай бұрын

Stacking, combining & expanding on the stated options: Selling Refinancing HELOC This requires access, knowledge, opportunity & means. Everything has to be taken into account, then diligently & patiently implemented. What are the pros/cons of selling? Do you own property? Does the property have sufficient equity. Finance/Refinance, what are the terms & rates that you qualify for & based on your loan type, what are the parameters? There are many factors that have to be considered & addressed prior to striving & succeeding with any given strategy. However, if you own a few assets or a portfolio of assets, then you should have enough leverage to implement a strategy or a combination of various strategies, utilizing the above tools & approaches.

@dev2times 5 ай бұрын

Refinancing actually added more debt/time when i did it . I guess it depends

@applechili2848 5 ай бұрын

@@dev2times OPM. If you’re not living there or paying a mortgage, a refinance has to be done strategically. Example: When rates dropped to 2.15% & you refinanced your portfolio, more than likely you added debt/time; however, you likely saved money/time in acquiring a lower interest rate… Look, there are too many variables, but all-in-all, like you stated, "it depends".

@dev2times 5 ай бұрын

@@applechili2848 yea my rate did drop tho. So that was good. Guess like they said, over time it'll make a difference