What options do I have as a homeowner?

[Jordan Pothier]

Hey again, I am a homeowner and have been for the last almost 3 years. I was wondering if there was anything I can do, or if this is a smart move, with borrowing from/against my house? I do have equity built up and a decent down payment at purchase but do not want to start pulling from my savings for a flip or rental, I would like to get started with either one of these strategies as I do not have any rentals or flips under my belt yet. Has anybody had any experience in this if so do you mind unpacking what you did? Is this a smart way to get started?

[James Galla]

You don't really provide many details in terms of the numbers, your finances, neighborhood, etc. Regardless, here are some things you can do:

1. Sell the property and move into somewhere cheaper - this will loosen up your debt-to-income ratio and permit you to have greater access to credit that you can use for real estate investments.

2. Rehab your property then sell. If you rehab your property, the equity will increase and then you can justify a higher sales price which will essentially pull out cash from your investment. It would be a live-in flip.

3. If there is sufficient equity in the property, perhaps you could explore a cash-out refinance. This will allow you to pull out your equity as cash and you can place this extra cash as a down payment onto a rental unit. Follow-up with the BRRRR strategy.

4. In the alternative, you could do a HELOC (Home Equity Line of Credit) on your property and use this source of cash to finance your next purchase.

As a footnote, please be sure to check out BiggerPocket's connections on hard money lenders.

I hope this gives you some insight into what maneuver you can do.