Change the locks and codes on all doors including the garage door (also change the security code if there’s an alarm system set up in the house.) You never know how many people may have a key
GIMME MORE (Real Estate that is!)
Dated: December 16 2021
Welcome back! I see you’re still putting some thought into real estate investing and I’m so excited to talk a little more about it with you!
Now that you’ve got your primary residence under your belt, you’ve owned it for a few years, you’ve got some equity built up, it’s time to talk about how you can leverage your ownership of that property to help you buy more.
You might be thinking to yourself “Kristen you're insane, there's no way that I can afford another downpayment to buy another property with the market the way it is right now!” and you’re right.. Perhaps I am a little bit crazy, but it’s not insane to think about ways to expand your portfolio and find ways to purchase more property. If you own your current home, you too can become a real estate investor.
Today we’re going to discuss how to leverage your current home to buy another one.
If you have a little bit of savings tucked away, but you’re nervous about investing it into stocks, bonds, and mutual funds with the market being so volatile these days, why not use those funds as a downpayment on a second property? Especially if you’ve outgrown your current home, now could be the perfect time to think about upgrading your primary residence and renting out your current space.
I know I said IF you’ve got some savings... And the reality of life is that a lot of people don’t right now... but that isn't your only option!
I have 2 more…
Pull the equity out of your property using a home equity line of credit (HELOC).
Qualified borrowers are typically able to access up to 80% of their home equity when taking out a HELOC.
Essentially, this is a line of credit secured against your home and is generally offered for around 2.95-3.95%...
Remember back to our example from my last blog post - How Investing In Real Estate Can Make Your Retirement Dreams Become Reality.
You bought a home for $600,000 ten years ago and you’ve got some equity built up. Out of $495,000 in equity, you would be able to access $396,000 of those funds.
OPTION #3 is to refinance your current home (aka get a new mortgage) to pull some equity out and use that towards a second home.
The numbers generally work out the same but the decision is whether you would like to pay a line of credit plus your mortgage every month OR if you would it all rolled into one mortgage payment with nothing else to remember.
Here’s a Kristen fun fact: Your mortgage interest and the interest on your HELOC become tax deductible when you claim rental income on your personal taxes.
$396,000 is a great downpayment on a new place but there are things that you will need to keep in mind. We need to make sure your new mortgage payment OR your new mortgage payment PLUS your heloc payment will be covered by the amount of rent you can bring in on your new investment property.
These are things we can sit down to discuss together prior to making any big moves.
Thinking real estate investing might be for you? Or just want to chat about what's happening in the real estate market these days? I'm always available to chat!
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Over the last 18 months, the value of real estate in Southwestern Ontario has increased exponentially. This probably has a lot of people really putting some serious thought into whether real estate