What would you do if you had $150+k in equity?

Question

I am starting off the new year and really want to get build my wealth in a better way.

I've got several properties (including my own house) paid off free and clear for over a decade. I'm 45 years old.  I chatted with a friend who said I should refinance, take the money and use it to buy more properties or even re-invest in other channels.

From rental properties alone, probably about $150k in equity.  That's not even including a HELOC which I can get from my own residence which could be another few hundred thous.

I'm not a big buy and hold guy, although I do have about 3 properties, but I am not the guy who wants to have 10 properties and deal with the headaches.  Yes, I can hire a property management company but I've had bad experiences with them and the cash flow really got eaten up by all of their fees and rehab overspending.  I'm not a handyman type of person to do it myself either.

What would you do if you could leverage the current properties and use the money to make even more money?  Ideas:

* re-invest in higher yielding avenues (like which index funds, etc),
* be a private lender to other investors and charge a high interest rate (obviously I'll need to perform my due diligence when borrowing this money),
* buy more properties with low maintenance and try a better prop mgmt company
* try getting into commercial properties (I'm new to this)
* I've heard about buying discounted notes???
* buy a house cheap, take title for 90 day seasoning, then retail for a higher price profit? (I haven't really done this before b/c I didn't like dealing with contractors and fix-ups too much)

Anyway, what would you suggest so that I can grow and build wealth even faster without a lot of headaches. I understand if you are not a financial advisor and I know it's just your opinion but I'd like to get your thoughts.  I plan to also consult a financial planner as well but since I've been doing real estate investing for over 10 years, I have a particular inclination to using real estate to build wealth.

Thank you for your time!

God Bless

Rob

Joe Villeneuve · Answer

@Robert L.

Q:  any suggestions on which kind of banker to target? A:  Banks usually will have lower limits on how many times you can do this.  I have banks I use, but I also have a private broker.  Through that broker I get more access to a variety of programs...and my limit is 10 loans in my name.

Q:   I can start with my local credit union bank that already know my assets, but wasn't sure if I should be talking to someone else who better understands this approach.A:  Many on this site, and I understand this approach.  I wrote a book, and designed a system around it.

Q -  (OK, more like a statement):  As for your question what it will do to my cashflow?  After all expenses + new mortgage, my cashflow for each of the 3 properties is going to be about $300/mo.  A (OK. more like a comment):  "We have a winner!!"

Q: So what you're saying is with the REFI money I can just "reuse" the money and grow the cash to buy more and more properties to build a portfolio of properties?A:  YES.  You will have a limit on how many times you can do this, based on your lender(s).  Once you reach your limit, there are many ways to keep going.

Q:  To "retire" I will need to build a substantial enough portfolio of houses...A:  Fewer than you think.

Q: ....and have property management take care of it (unless I do it myself), correct?A:  I analyze every deal with a PM in place.

Robert L. · Answer

@Joe Villeneuve

Awesome assessment.  One of the things I was going to do was to talk to a banker to partner with me on this--any suggestions on which kind of banker to target?  I can start with my local credit union bank that already know my assets, but wasn't sure if I should be talking to someone else who better understands this approach.

As for your question what it will do to my cashflow?  After all expenses + new mortgage, my cashflow for each of the 3 properties is going to be about $300/mo.

So what you're saying is with the REFI money I can just "reuse" the money and grow the cash to buy more and more properties to build a portfolio of properties?

To "retire" I will need to build a substantial enough portfolio of houses and have property management take care of it (unless I do it myself), correct?

William Byers · Answer

Rob,

I'm not sure what your friend knows or doesn't know about real estate or investing in real estate, but from your post I see that you're not handy, not a buy and hold guy, don't like being a landlord (or property managers), but are inclined to use real estate to "build wealth faster without a lot of headaches."

You do have many options (the ones listed along with many others),  but I'm not sure these are compatible goals and expectations.  I recommend you consult with someone who can evaluate these assets and help you develop a plan that realistically meets your goals on a risk adjusted basis.

Robert L. · Answer

@Joe Villeneuve All properties are free and clear located in Jacksonville, FL

Joe Villeneuve · Answer

@Robert L. 1st, make sure you use the "@"  and the name of the person (found below the post once you start the "@joe...", or the person you are directing you comments to may not know it.

2nd, What is the equity in each of these properties?

3rd, where are these properties?

Robert L. · Answer

Thanks Joe for your inquiry.  All my properties are tenant occupied and great condition

Property #1: Retails for $50k, Rent $727/moProperty #2: Retails for $55k, Rent $743/moProperty #3: Retails for $100k, Rent $920/mo

I am being a bit conservative with the values because they could be worth more; I'm pricing them b/c they are for quick sale if I needed to. My credit score is 807 too, btw

Joe Villeneuve · Answer

First, I wouldn't refi your own home if you didn't have to...and having to is a last resort with a foolproof strategy to pay it back ASAP.

Second, you said you have accumulative $150k in your rentals.  How?  What are they individually and what are the ARV's for each.  This could very well be your ticket to the destination you desire.