How to Use Your Home Equity to Buy Rental Properties NOW

Рет қаралды 124,624

Күн бұрын

Want to buy rental properties while the market is down? If you didn’t already know, you could be sitting on the perfect funding source found right under your own feet. But with today’s mortgage rates still double what they were last year, is taking out any of your equity a mistake, or could this be the opportunity of a lifetime to scoop up some sweet real estate deals at a stellar price? We’ve got our expert investor, lender, broker, and ship-metaphor-making host, David Greene, to give you his wealth-building secrets.
Welcome back to another Seeing Greene, where we take questions live from BiggerPockets listeners on how you can retire early with real estate, build a business you love, and create generational wealth. This time, we’ve got questions on how to use home equity to buy more property, then we debate cash flow vs. appreciation and which is a better bang for your buck. We’ll also compare commercial vs. residential real estate and explain how these two seemingly similar assets operate VERY differently. And finally, David gives his favorite news sources on where to learn about the economy, the housing market, inflation, and every other variable that’ll help you make intelligent investing decisions!
Want to ask David a question? If so, submit your question here (www.biggerpockets.com/david?u...) so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums and ask other investors their take, or follow David on Instagram to see when he’s going live so you can hop on a live Q&A and get your question answered on the spot!
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Episode #747
Show notes at: www.biggerpockets.com/blog/re...
00:00 Intro
02:24 Quick Tip
02:50 How to Use Home Equity to Build Your Portfolio
11:16 The "Gas Station Sushi" of Real Estate
16:04 Commercial vs. Residential Real Estate
23:38 Questions from the Comment Section
34:13 The Economic "Waves" That Make You Rich
43:30 Pay Off Debt or Buy More Rentals?
50:03 Connect with David!

Пікірлер: 237

@marshallhennington4369 Жыл бұрын

Excellent David! You are a good dude and very humble. I have followed bigger pockets these last 3 years and it inspired me to have acquired, 2 homes, a Tri plex and 2 four plex’s and I am currently in escrow on another property and I own my main home. All due to taking action. 5 years ago my credit sucked back then, I was in debt and I had student loans. I cleaned up all of those problems and that was 5 years ago. Now I am building a small portfolio. I also plan to pay off 3 properties in the next 3 years. If I can do it anyone can do it! Get to work fellas and start your new life!

@Thx392 Жыл бұрын

Any recommendations about how to learn how to do this? Sources beyond Bigger pockets… thank you! And congratulations 🎉

@charlesholder4150 5 ай бұрын

How much do you make?

@brentharrington3384 Жыл бұрын

Using your home as collateral on investment properties is a major risk. I know people who did this and were WIPE OUT when the government screwed landlords with the ''renters protection.'' Losing an income property sucks, losing your home is catastrophic.

@adrielaraujo2604 Жыл бұрын

Yeah definitely sucks, thats why reserves are always mandatory

@camcam3087 Жыл бұрын

2+ years of non payment and eviction moratorium. Your saying 2 years of reserves??

@adrielaraujo2604 Жыл бұрын

@@camcam3087 sorry but I doubt the majority of people went 2 years without paying but if that's the case better screening

@romi929 Жыл бұрын

@@adrielaraujo2604 in some states like CA some people did go for 2 years not paying rent thanks to the Governor. This is during Covid 20-21

@victoriab7914 Жыл бұрын

I'm sure that landlords got a break on mortgage payments. I could file for mortgage forbearance with my loan servicer if I wanted to.

@Pedroza1023 5 ай бұрын

What would you do if you were in my shoes!? I purchased a 10 acre farm in central Fl in early 21 for 460k, put 20% down and currently owe 349k on it. When I purchased the property 6 acres of it was wooded, I cleared that wooded land, planted grass, put more paddocks in, made it beautiful and it just so happens to be 4 miles from something called the World Equestrian Center which has made the properties in that area sky rocket. I have a 2.5% interest rate on it, monthly mortgage is $1,518. I currently have the entire farm rented out (annual rental, they pay all expenses) for 6,885 a month. The one year rental is over Feb 8th 2024 and my tenant just signed a new annual lease for $7,350 a month. The farm is now worth over a million dollars. so I have about 650k equity in it. Id like to tap into that equity however as you know getting a HELOC on a rental is very difficult. Selling a property with a 2.5% interest rate that is producing 5x its mortgage just seems dumb. What do I do!?

@Funtimes900 5 ай бұрын

Awesome story I actually wanted to buy land in central Florida to have a “gateway” from the city , any tips ? What type of loan did you use or was it cash buy?

@bloomip Жыл бұрын

David I Love the macroeconomics stuff , also , love the way you explain and simplify real estate. break it down for us newbies . Thank you we definitely appreciate it

@vaughanmoody Жыл бұрын

David, regarding the chair swiveling comment, you made a great point about having to think about what to say, and being able to say it in an informative yet easy-to-understand way, while also getting it across in an engaging and even entertaining way, without flubbing your words, getting side-tracked or losing your train of thought. That’s SUPER difficult to do, and there’s very few people who can do that, but you do it very well. Kudos to you!

@corymeals8581 Жыл бұрын

Thanks for answering my question, David! You’re right tho I wasn’t crazy about your answers. I was able to get a line of credit in the works on one of the properties. It is with the lender that has the first position, small local bank.

@thepastrywardenreloaded3469 Жыл бұрын

I just bought your book today bro. I'm digesting chapeter 1 and two right now and repeating both to get into the mindset of whats to happen. Thanks

@shondar.1086 Жыл бұрын

Love me some David. I really appreciate the content you bring daily. I’ve learned so much

@CasebyCaseIntuitive 3 ай бұрын

David! Your comparisons and analogies are awesome! Thanks for the information and most importantly thanks for your ability to communicate well!

@TerryCollinsP31Lifestyle Жыл бұрын

That was so good. Hope everyone caught that nugget. The problem is people want to take residential plan and try to take that into commercial.

@benardettefon9325 Жыл бұрын

Great teaching sir , love the way you explain every question

@JossinJax 4 ай бұрын

Hi there! I just stumbled onto your channel and absolutely enjoyed how you approach each question and the concrete examples that you use to elucidate the underlaying economic concept(s). I’d like to know how I can ask a question of my own. Thanks!

@jaih475 Жыл бұрын

Comfort & Profit are at opposite ends of the spectrum. Facts.

@andrewkent8388 Жыл бұрын

Awesome video David! You guys are going to help me change my life

@carolinewolaver5590 Жыл бұрын

David is really doing some great topics lately thanks for this!! I’m a huge fan all over again!

@KN-cool Жыл бұрын

Maybe dont take equity out of your home right now 🙏

@TerryCollinsP31Lifestyle Жыл бұрын

Real Estate is what you do with the money you already made. Yes!!! 💯

@Nicktheofficial1000 Жыл бұрын

Hey David great advice man. Appreciate you sharing the knowledge

@asterteklab1992 Жыл бұрын

Thank you, David! Iam glad I found your channel very inspiring, and I learned a lot about real estate.

@tubepuke1 Жыл бұрын

Love that last tidbit about PORTFOLIO ARCHITECTURE!

@dreasway2 Жыл бұрын

I love love love your content and appreciate the information you provide. It's simple, easy to digest, seemingly honest and the chair swival isn't annoying at all😂. But I have to say that my favorite is the pettiness between you and Brandon 🤷‍♀️

@saucey2470 Жыл бұрын

Amazing knowledge free knowledge 🙌🏽 stay blessed!

@leosouiher81 Жыл бұрын

Hi David, thanks for this great episode. I think "On the market podcast" would be a good suggestion when you answered Jordan's question.

@Shakstarr268_ Жыл бұрын

The macro economics segment of this is was incredible, thank you!

@Heatherbailey1 Жыл бұрын

Gas station sushi! 😂 That’s also the perfect analogy for committing to a less-than-reciprocal, less-than-satisfying, less-than-reasonable relationship.

@rubayyatkhan Жыл бұрын

Hey DG this was amazing! I'd love to learn more about Macro Economics, I follow George Gammon as well.

@alicia121ful Жыл бұрын

Thank you for your great program.

@pittsburghpets3759 Жыл бұрын

Thanks for sharing! Liked the jet ski vs battleship analogy 👍🏻

@DevonNitta Жыл бұрын

Thanks for the great podcast! Personally I love hearing about the macroeconomic news and how that affects REI. Keep it coming!

@NevadaNotaryServices Жыл бұрын

❤ your answers about the chair 😂 Great info as always ❤

@granvillemanzano7182 Жыл бұрын

HELOC is what you should do, get 80 percent of your equity and pay off your home any extra you invest

@christopherfinau7615 Жыл бұрын

Love this channel!!!

@MikeJones-mx5je Жыл бұрын

Great podcast. Love to hear more about economy the fed.

@reggyeadiemdmba3182 Жыл бұрын

Remember, if you take out a home equity loan on a rental property (with equity), the interest on the second rental home would not be deductible.

@kerrybaird739 Жыл бұрын

With tracing to investment use it can be deducted.

@JLW667 Жыл бұрын

<a href="#" class="seekto" data-time="15">0:15</a> <a href="#" class="seekto" data-time="287">4:47</a> Money is Energy <a href="#" class="seekto" data-time="830">13:50</a> <a href="#" class="seekto" data-time="2161">36:01</a> Real Estate as a Store a Value

@MelissaBlair-tv4hw Жыл бұрын

Love the economics talk!

@lailaatallah1857 Жыл бұрын

David, this was so helpful! Hearing you troubleshoot and strategize people’s very specific situations is so instructive. I liked learning about the four kinds of equity, the 3 criteria for whether to buy or not, and I was happy and sad to have my commercial property dreams dashed preemptively when you outlined all the problems with it, especially early in one’s investing career. 😂

@jim5128 Жыл бұрын

The description of yourself using celebrities was priceless and spot on. LMAO. Love what you guys do. Thank you!

@ffjokere3 4 ай бұрын

Hey David, new to the channel, just subscribed. good stuff

@KN-cool Жыл бұрын

So should I be taking equity out of my home now or waiting for the crash that you guys said couldn't happen that you now say is coming?? 🤣🤣🤣🤣🤣

@sarahgrillo9915 Жыл бұрын

Well to be fair, they say residential is in a correction not a crash. They also are careful to note that each market has nuance so become an expert on what is taking place in your target market. They say commercial is in a bit more trouble because of the debt service. It’s difficult to flesh out every detail when responding to people’s questions. They probably assume you have been listening a while and have heard these principles if you are a person who is writing a question on the podcast.. it is not a cookie cutter market right now. There is not a one size fits all or an easy checklist to just follow..JS

@brianb8267 Жыл бұрын

The velocity of money also plays a part in inflation. Thus raising rates artificially will slow the velocity. Also destroys demand.

@TerryCollinsP31Lifestyle Жыл бұрын

2nd Question: Yikes that’s not a good investment. Love that. CashFlow, Equity, Headache value. EXACTLY. This investment would be a headache. No sometimes when you are hungry, you make a bad financial choice.

@TerryCollinsP31Lifestyle Жыл бұрын

It’s not healthy to stop working. Great point. Build wealth different from creating wealth.

@TerryCollinsP31Lifestyle Жыл бұрын

This is so good.

@ablejohnson Жыл бұрын

The chair swivel really helps be focus!!! Swivel-on!

@nomadbro2839 Жыл бұрын

Good view.... thanks for share... Share N Build

@maiiilyn2360 Жыл бұрын

Macro resources: Barry Habib, Lyn Alden, jim Richards, Blockworks Macro

@maiiilyn2360 Жыл бұрын

*Jim Richard’s

@maiiilyn2360 Жыл бұрын

*Jim Rickards…you can find some of their interviews on KZfaq university 👍

@AutomotiveAnatomy Жыл бұрын

More shows like this and long format 🎉

@dr.hitskins7821 Жыл бұрын

Love the gas station sushi correlation, very nice…

@MattyB414 Жыл бұрын

Hey David, I know insurance is not a fun topic to discuss, but what is enough insurance for each property, when's it good to get an umbrella, commercial vs residential, and where should it be held under as far as the LLC for the property or under personal name? We've got our trifecta of our trust, management LLC and individual LLCs per property as that's what we are comfortable with. We have 6 LTR with strong cashflow and continue to grow! Thanks, David!

@behnamhp5898 Жыл бұрын

Thanks, David. Could you please talk about FHA loans in detail? The requirements, limitations, loopholes, tips, etc. And by the way, I live in SoCal.

@obie1coby Жыл бұрын

Gas station sushi! Lol. The GREATEST analogy I've ever heard. I definitely come here for the metaphors that i can steal and apply to my employees

@TerryCollinsP31Lifestyle Жыл бұрын

Non steroid wealth builder. Love it!!!!

@michaelbowling3771 Жыл бұрын

Thank you David moneybags

@dcmsr5141 9 ай бұрын

Gas Station Sushi!! I'm done already 🤣

@Dope_Digital Жыл бұрын

Ahh for Cory Mills. I have a HELOC in process right now through a credit union. So they are offering it. Shop around

@sluggishincaliforniatv6741 Жыл бұрын

Which CU? What’s max LTV?

@corymeals8581 Жыл бұрын

I actually was able to get my banker to approve a line of credit on some land that I own and have a good bit of equity in. They’re in the first position and they’re a local bank in Sherman. For now it’s hold the duplexes and single fam home. I’m just getting that line of credit tee’d up in case a smoking deal comes along!

@TerryCollinsP31Lifestyle Жыл бұрын

Relate wealth building to fitness. So good

@ManOfSteelContest Жыл бұрын

Hello, what is your opinion about trust section 643b, in purpose to save on capital gain taxes?

@smilingxninja9726 Жыл бұрын

What would you say is the best recommendation to get into real estate for someone who only owns a PPOR and works full time 50 hours a week? My residence is 3bd 1 bath, bought it for 210k about a year and a half ago at a 3.25% interest with conventional loan

@jamesdixon8891 Жыл бұрын

Well, in 08 I purchased a duplex in 08 for less than a price of a used car. Now it's worth more than a new BMW.. Timing is everything.

@tyjameson7404 Жыл бұрын

Epic 👍👊🏽💪🏾

@austinnoble1969 8 ай бұрын

"Residential Real Estate" purchased by a corporation to rent to residents will pay commercial property taxes 20%+.

@TerryCollinsP31Lifestyle Жыл бұрын

You have to see money differently

@browardpalmbeachcountyliving Жыл бұрын

Portfolio engineering 💯

@TerryCollinsP31Lifestyle Жыл бұрын

When the deal goes wrong, it’s extra wrong.

@notarivsanonymvs2561 Жыл бұрын

Great information! Thank you, David.

@mascaretllcmanager7481 Жыл бұрын

any thoughts on rent control/“stabilization”? hearing more about it daily

@campingforayearrenoheart5908 Жыл бұрын

I’m in debt and want to go in more debt at bad levels 🎉! Ok 👌 makes great idea a bad idea

@StutiPatel8 Жыл бұрын

Hello I am in the Bay Area and would like to attend some meetups so please let me know where can I look for them and get connected . Thanks a lot for sharing so much information about RE , totally appreciated.

@danieltik Жыл бұрын

Corey from the first question, call Figure lending

@corymeals8581 Жыл бұрын

Was able to get a local bank to give a line of credit agains the equity in some land I have. This question was posed a while ago. I don’t think I’m going to tap into the equity on the duplexes and single fam rentals for now.

@corymeals8581 Жыл бұрын

And to clarify, they were already in a first position

@calebkang5544 Жыл бұрын

I don't think market is down in CA. Still the numbers don't work

@xXtdudeXx92 Жыл бұрын

Worry for loss of cash flow is the problem. Especially in a falling market lol. The interest rate is a huge reason. I agree bigger and better, but that only works if your not already in a premium location. The idea of not selling for inflation is understandable when is like... 1-2%. But they went up 4% this year and it's still climbing. Curious about Rolling his properties into a trust and then pulling a loan off the portfolio. Is their something their?

@jd-um4jw Жыл бұрын

Haha you definitely do not look like Shrek! You Rock! Thank you for the info!

@jpcubancuban1502 Жыл бұрын

Hello there david, first of all, want to say thank you for the amazing content...... i bout my first home 1year ago, right now it has around 124k equity, i want to buy an investment property, can not get a HELOC since i'm close to my DTI max cuz some other debt (credit cards), what is a better way to go about it, thanks in advance, yimy perez

@antoniopdiaz7 Жыл бұрын

How can I do this in New York? Prices here are nuts!

@desirematthew428 Жыл бұрын

How do I start watching from episode 1 to current

@michaelhaze4507 8 ай бұрын

I need to know if this is financing that I need to use or not (line of credit), I'm gonna be ramping my revenue ASAP as a new contractor installing windows and doors, I've got a property I'll buy in the immediate future, Is it blow or no show? please let me know why otherwise thank you.

@midnighttrader2180 Жыл бұрын

If you were to choose between Michigan or Colorado, which state would you choose?

@sdblalock21 Жыл бұрын

"Store of energy" reminds me of Bitcoin :)

@KN-cool Жыл бұрын

Except you dont live in a bitcoin 🤣

@sdblalock21 Жыл бұрын

@@KN-cool umm, yeah, I know, it's a different asset class...

@Chads6Strings Жыл бұрын

Can't get a HELOC in Texas, unless it's on your primary residence.

@marylouisone 4 ай бұрын

I like What david said the Dollar is worth less versus worthless 😂

@matthewburkholder1076 11 ай бұрын

$300k a year! I would kill for that much money, you sir, are already wealthy

@JohnCarrFitness Жыл бұрын

And this is how many people went into bankruptcy in 2008. Concept sounds smart and definitely a good pitch for a real estate broker like yourself. But highly dangerous and most people will get burned. Borrowing equity at these giant interest rates and buying more negative cash flow is a lose lose situation.

@mikejonas6331 Жыл бұрын

Were you highly leveraged in your properties??

@treybucio4758 Жыл бұрын

No 2008 was predatory lending then people panicked and sold at a loss

@Salute2TheTroops Жыл бұрын

2008 was Interest only loans and never explained to the borrowers correctly. The ninja loans had people walking into properties they couldn't afford. The smart people bought multi units and those same people are millionaires today

@floruby3608 Жыл бұрын

Scared money makes no money.

@ginalowe9103 Жыл бұрын

I think you need to be careful with leverage. That being said, I bought 18 units in 2017 and sold my 12 unit property that had 8 storage units for almost double what I paid for it. I was retiring and with that property, I felt overextended. So I sold it and bought into 2 DSTs that created a monthly income stream. I felt it was Gods direction by using my husbands advice. At the time I bought the property, I used my HELOC on my paid off home as a down payment for that property. I was working full time making 6 figures and it didn’t seem like I was overleveraged at that time. I sold it in 2022 May.

@carlosmagana8983 Жыл бұрын

Do you do meet ups in the Bay Area?

@TerryCollinsP31Lifestyle Жыл бұрын

That’s good. You don’t want bad players

@rfr3620 Жыл бұрын

QUIICKK TIP

@InvestingwithBishop Жыл бұрын

Real Estate, Bitcoin and stocks are my go to asset classes.

@user-rv2xy5jv1f Жыл бұрын

what if you dont want to sell because of interest rates and its cash flowing 1k a month?

@marylouisone 4 ай бұрын

What’s your daily real estate fitness David ?

@tomstout4815 Жыл бұрын

One week he talks smack about wholesaling, but next week he suggests risking your main homes equity

@dangood2287 Жыл бұрын

Hellllz no don't buy anything for 3-6 months, be smart get some price discovery and see what happens in banking

@enriquepuga7864 Жыл бұрын

Banks are not going to lend even if you have equaty, because they know all propertys will not have that equaty for long.

@litoreggie Жыл бұрын

💚💚💚

@kr1sant Жыл бұрын

This was kinda my issue. My interest rate is 0.851% and my mortgage payment with property taxes and insurance is $900 monthly. My tenant pays 2k currently and is in a month to month. The house is in a wonderful neighborhood, close to Dallas maverick arena, 27 minutes from cowboys stadium and 30 minutes from Texas Rangers Field. I owe 96,740 and it is worth roughy 375k-390k. It makes sense to cash out refinance and buy a few more properties. I can get like 3000/monthly in rent when the tenant leaves. I am also in the process building 2 houses.

@robaustin_ Жыл бұрын

Yeah I would probably keep this setup as well.

@paulgugger8987 Жыл бұрын

The whole reason for a 1031 is not to pay taxes, I would think you would know that?

@Youtube_ban_me Жыл бұрын

Can I give Corey better advice? just sit on your hands and build a cash position

@randyrandall2148 Жыл бұрын

That's exactly what I was thinking. DG's advice looks in the rear view mirror and he knows it. I think David wants the best for people and he is overly optimistic so that people take action (which is correct in the right environment). But his words are dangerous right now in this environment. He should point this out.

@corymeals8581 Жыл бұрын

I like this option too! I was able to tee up a line of credit on some land I have in case a smoking deal comes along. Im not going to sell and not going to refi. It makes no sense to do either of those right now.

@victorward3590 Жыл бұрын

Loved your podcast, but my situation was not covered..... I own my 5 unit rental property (that I reside in) and and wonder how I can extract some equity from it? Thank you for your expertise.

@localone1597 Жыл бұрын

If you have a loan on it, wouldn't you just take a cash out refi? Or if you own free and clear, take out a mortgage on it, getting it all in cash. Either way there's no tax because its not considered income. However this being a 5 unit, it would be a commercial loan.

@victorward3590 Жыл бұрын

@@localone1597 I asked the lender ( JPMC, who had my mortgage that I paid off ) and they told me that they don't "do that". I have excellent credit, no debt, income from the house and a full time job, so I am not sure where or how to proceed. I REALLY want to do another property, but I'm not savvy re financing. Btw, I could very easily convert into a four unit.

@victorward3590 Жыл бұрын

@@localone1597 oh, I own it free and clear and a smaller comp on the same block sold easily for 500k and new buildings across the street sold for 750k.

@localone1597 Жыл бұрын

@@victorward3590 I'd call around until I find someone that does

@victorward3590 Жыл бұрын

@@SigFigNewton yes, I am able to find tenants

@Wasted-GTA Жыл бұрын

I live in Paradise CA Northern and my rental is in Rancho Cordova near Sacramento. Are you near there? where are the local meet-ups? I would love to spit ball some ideas around.

@camcam3087 Жыл бұрын

You didn’t want by more land/ property in Paradise after the fire? How’s the fire insurance?

@mikejonas6331 Жыл бұрын

@Only Hands How do you manage a property from being 3 hours away? Do you have property management? How often do you come down to Rancho cordova? Thank you.