Do you own your primary residence? If so, there’s a helpful investing tool you might be overlooking. Smart investors know how to leverage, and this strategy can accelerate your real estate portfolio growth.
A home equity line of credit, also known as a HELOC, is a line of credit based on the amount of equity in your home. If you take out a HELOC, the bank will allow you access to a credit line that is typically worth 80% of your equity.
Let’s talk exact numbers. Assume that your primary residence is worth $100,000. Additionally, your mortgage balance is $50,000, leaving you with $50,000 worth of equity.
You are able to get a loan on your equity, usually between 80-90% of value. In our scenario, 90% of $50,000 is $45,000! When you take out a HELOC, the bank gives you a checkbook and a debit card. These funds are yours to use as you please.
Traditionally, a HELOC is used by homeowners to make home improvements, but there are no limits. You could buy a car, or pay off your credit cards. We’ve even used a HELOC to pay down our primary mortgage! You can hear more about that in our new book!
But what we’re talking about today is using a home equity line to purchase rental real estate. Think about our scenario above. $45,000 is just enough to purchase a cash-flowing property in a stable market, and ultimately be on your way to attaining financial freedom.
Ready To Build Passive Income Through Rental Real Estate?
Ready to talk about your goals? We're here to show you the tools and teach you the process to begin earning legacy wealth for you and your family.