Q&A: Does It Make Sense to Pull Out My Equity? – Episode 1045

If you have a historically low interest rate on your mortgage, does it make sense to take out a HELOC and pay current interest rates to tap into your equity? This is a great question — and it’s one we’re going to explore on this Q&A episode of Investing in Real Estate!

On today’s show, I’m answering three of your great questions on various investing and financial topics like pulling out your home equity, dealing with the wrongdoings of a past tenant, and how to decide if you should sell or hold your investments during times of economic turmoil. Click play to hear my answers to your questions!

On this episode you’ll learn: 

• How to decide if you should tap into your home equity.
• What to consider about dealing with a bad ex-tenant.
• My thoughts on selling vs. holding your investments in tough economic times.

How to Decide If You Should Tap Into Your Home Equity

If you have a low interest rate on your mortgage, I can understand why you’d be hesitant to pay today’s interest rates to access your equity. However, it’s important to remember that those interest rates in the 2-4% range are of the past. That was a once-in-a-lifetime opportunity!

So instead of measuring your HELOC rates against your mortgage rate, it makes more sense to weigh them against what you can earn on an investment property. So while you might pay 9% to access your home equity, you could get returns to the tune of 18% if you buy a rental property. To me, that would be worth it.

What to Consider About Dealing with a Bad Ex-Tenant

Nobody likes being burned by a tenant or having to pay a bill that doesn’t belong to them. If you want to make things right, you can always contact a lawyer or go to small claims court. However, these things will cost you a lot of time and energy. If it were me, I would just chalk it up to the cost of doing business and move forward.

My Thoughts on Selling vs. Holding Your Investments in Tough Economic Times

Personally, I won’t be selling any real estate or precious metals. These assets are a hedge against inflation and a great way to preserve your wealth. I can’t tell you what to do, but it is important to recognize that billionaires largely hold their assets throughout all cycles of the economy.

Ask Me a Question at morrisinvest.com/clayton

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