Help starting out

[Taye N.]

Hello Im new if you can help and give me some options or pointers on what you will do. I live in hayward california bay area. My goal is to own cashflow rental income property. cashflow enough so i can quit my current job and get into real estates full time. I purchased my sfr in 2010 for a good price. 230,000 now it worth around 550,000 Me and my wife has full time jobs. I was approved for 262,000 helco on my income alone. I can move in with my mom if i need too. Question? Should i sell ? 1031 exchange? Pull out equity buy multi? With the equity line if i use it. i think i will be maxed out for debt to income. What would you do? Some options help? Financing types? I dont know about for mulit? Thanks!!!

[Account Closed]

Taye,

I know you want to invest, but slow down my man. Sounds like you need more real estate knowledge before you should do any kind of investing. Get up to speed on what asset class you want to invest in. Then pick a market, study it and know it well. Investing is a process, not an event. If you borrow $250k from your HELOC at 4% and use that money to invest and make 10%. That's a 6% delta or $15k/year. Not enough to retire from a W-2. You need to have a lot of equity before you get serious cash-flow especially in the Bay Area. Given we are sitting close to the top of the market doesn't make things any simpler.

I'm going to steal this line from my friend @Johnson H. It's easy to buy, but it's not easy to buy and make money. You must have an exit strategy before you invest in any asset class. If there's no exit strategy. How do you get out without taking a beating? Just like buying a NNN in a middle of no where and collecting your 6% yield. Give me $1M and I'll pay you back at 6% over the next 16 years. After that, you're on your own and the asset class is almost worthless if your tenant doesn't renew the lease.

Investing locally gives you a higher chance of success and a chance to force appreciate and gain some immediate equity, where you can rinse and repeat and put your equity to work over and over again. This is how you build wealth over the long-term. 

Best of luck.