Does taking out a HELOC impact your credit score? What are some things to consider about your overall financial snapshot before you decide to utilize a HELOC for investing? That’s the first question I’m answering on today’s show!
Today’s three callers sent in great questions about the financial implications of using a HELOC, the best ways to research a rental market, and how to decide how to use your funds on investing. I believe that we can learn from other people’s questions, and I hope this Q&A is useful for your personal investing journey. Please join me for this episode of Investing in Real Estate!
On this episode you’ll learn:
- How a HELOC can impact your credit.
- Ways to look for housing and market data.
- How to decide between financing a property and buying it outright.
How a HELOC Can Impact Your Credit
A HELOC is a line of credit that works similarly to a credit card. For starters, it’s going to be another line item on your credit report. A HELOC is a revolving line of credit, so using up too much of the balance can be unfavorable to lenders. Typically you’re going to want to keep your credit utilization rate below 30%.
You should definitely be thinking about how using this money affect your overall financial snapshot, especially if you plan to finance any large purchases in the near future. Will it become a big dent in your debt-to-income ratio? Will that affect your ability to grow your portfolio in other ways?
Ways to Look for Housing and Market Data
Unfortunately, I don’t know any resources for finding data that are accurate and up-to-date. I suggest looking for data in a few different ways. You’re going to want to look at databases on the county level from the specific market you’re considering. I’d also suggest getting on the phone with local property management companies to ask about their specific vacancy rates. Here is a video on what to look for in a rental market.
How to Decide Between Financing a Property and Buying It Outright
I’m a fan of using other people’s money to build wealth. This is going to be a personal decision that’s dictated by your circumstances but if you can swing it, I’d plan to use funds as down payments on multiple rental properties. If you need help weighing your options, my team is happy to help build a customized plan for you. Schedule a free call today at morrisinvest.com.
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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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