Q&A: What’s My Favorite Investing Strategy? – Episode 825

Today’s first caller asked an interesting question: what real estate strategy did I use starting out, and how has my investing approach evolved over time? That’s the first question I’m answering on this episode of Investing in Real Estate.

On this episode, I’m taking three great listener questions on my favorite investing strategies, tapping into equity to grow a rental portfolio, and how to protect your rental property in the event of a fire. Click play to hear my answers to your real estate questions!

On this episode you’ll learn: 

• How my personal investing strategy has changed over the years.
• The best way to tap into the equity on a rental property.
• How to protect yourself and your investment in the event of a fire.

How My Personal Investing Strategy Has Changed Over the Years

When I began investing, I used a 401k loan. At the time, I was working in the tv business and had a company match in my 401k. A 401k loan can be an excellent strategy, because it’s a loan from your account, there are great tax benefits, and it allows you to exceed the annual contribution rate. At that time, I purchased two low cost single-family homes in Michigan, hired out a contractor, and had them renovated. I was using the BRRRR Method, so I later refinanced those properties to grow my portfolio.

Today, I do things much differently. I invest in the most landlord friendly states (like Texas) and build new construction single-family homes and duplexes. I’m getting the best bang for my buck, and reap the tax benefits of strategies like cost segregation.

The Best Way to Tap Into the Equity on a Rental Property

My personal favorite strategy for leveraging equity is to use a home equity line of credit. If you can find a HELOC for your rental properties, then you have access to a line of credit you can access any time. Some benefits of the HELOC are:

• It is a revolving line of credit that you can reuse.
• It typically has a low interest rate.
• Most HELOCs give you access to checks and a debit card.
• There are very few limitations on how you can use the funds.
• It has flexible repayment options, to an extent.

How to Protect Yourself and Your Investment in the Event of a Fire

Here’s my take on preparing for a fire: it’s smart to be prepared, but I find that this is often one of those “what if” questions that stops people from taking action. If you have an insurance policy that has replacement coverage and loss of rent coverage, you should be fine.

The chances of a fire happening in your property are pretty low. Certainly, you should have insurance in place, but don’t let this stop you from investing in real estate.

Ask Me a Question at morrisinvest.com/clayton

Episode Resources
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morrisinvest.com/Clayton
Cost Segregation Video 
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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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