Is it a good idea to house hack in order to get your start as a real estate investor? That’s our first question on today’s show, and I’m going to share some pros and cons of house hacking.
This Q&A episode also contains questions about accelerating cash flow and what you need to know about using a HELOC to invest. If you want to hear my answers to your real estate questions, press play on this episode of Investing in Real Estate!
Pros and Cons of House Hack to Get Started in Real Estate
If you have money that you’re considering using as a down payment to house hack your first investment, I think that’s smart. Interest rates are low, and house hacking is a great way to build equity and grow your net worth. On last week’s Q&A, I spoke in detail about how to house hack: you can find that episode here. I would recommend only moving forward with this strategy if you love the area and can find a great property.
Alternatively, if you’d rather make an investment you don’t have to live in, consider establishing a real estate partnership. Here’s a video I published on creating a partnership. In this scenario, you can pool your down payment funds with another investor (or multiple investors) and buy a rental property in one of the best rental markets.
How to Accelerate Cash Flow
I understand that a 30-year mortgage is not optimal for every investor. That’s why my team cares about learning every client’s goals and timelines. We work with over 60 different lenders and are proud to offer multiple financing options, including 15 and 20 year mortgages. If I wanted to accelerate my cash flow, I’d get a shorter term mortgage and use the tenant’s rent to pay down that mortgage ASAP.
What to Consider Before Getting a HELOC
Investing with a HELOC is one of my favorite strategies, but it may not be the right strategy for your current situation. If you know you’re planning on moving, it’s not the best move to tap into your equity. In order to sell your home, you’d have to pay back your line of credit. You could consider using a portion of a HELOC to make a down payment on a rental property, but you’d want to be sure you have the means to pay it back before you plan on moving.
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Q&A: Should I Wait to Invest? – Episode 763
How to Buy Rental Properties with Multiple Investors
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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