Q&A: How Can I Access the Equity in My Rental Property? – Episode 935

Since HELOCs can be difficult to find on an investment property, what’s the best way to access the equity on a rental? In what scenarios would a cash out refinance be a better option? That’s the first question I’m answering on today’s show!

On this episode of Investing in Real Estate, we’re going to discuss the future of digital currency, and how to protect yourself from the decline of the US dollar. I’m also tackling your questions about home equity, buying an investment property in a college town, and how to build your portfolio with a bad credit score. Click play to hear my answers to your real estate questions!

On this episode you’ll learn:

• The main differences between a HELOC and a cash out refinance.
• What to consider before buying a rental property in a college town.
• Options for building your portfolio with a bad credit score.

The Main Differences Between a HELOC and a Cash Out Refinance

A HELOC and a refinance both allow you to tap into the equity on a rental property. Personally, I’m not a fan of the cash out refinance, because it takes the place of your existing mortgage. There are a lot of closing costs associated, and unless you’re getting an incredibly lower rate, it’s often not worth it. A HELOC, or a second mortgage, allows you to get access to a lump sum of money, and it has a revolving balance similar to a credit card.

And even though HELOCs can be harder to attain on a rental property, it is possible. I suggest shopping around with multiple lenders. You can also check out my friend Dan at Churchill Mortgage, he’s very experienced with working with investors.

What to Consider Before Buying a Rental Property in a College Town

Generally speaking, a college or university town can be a great rental market. However, it’s still important to do market research. You’re still going to want to look at vacancy rates, landlord friendliness, etc. Investing in a college town can be a great experience, but you may want to explore other options. You can schedule a free call with my team if you’d like to learn more about investing in real estate.

Options for Building Your Portfolio with a Bad Credit Score

Don’t let a bad credit score stop you from reaching your financial goals. The first thing I would try is using Scoremaster to see if you can quickly clean up that score. From there, reach out to multiple lenders to see what they can offer. Another option to entertain is non-recourse financing, which has higher interest rates but is not based on your personal credit.

Ask Me a Question at morrisinvest.com/clayton

Episode Resources
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morrisinvest.com/Clayton
Dan Kraus at Churchill Mortgage 
How to Pay Off Your Mortgage in 5 Years
The Power of Non-Recourse Financing 
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