Updated about 14 years ago on . Most recent reply
Proper Use of Leverage
Hello BP Community,
Quick question on leverage. Say I purchase a home in need of rehabbing for 100k on a block where homes usually go for 250k. I put down 20%, $20,000 down leaving me with equity of 20k. I rehab the place bring it up to market value, and have it appraised for 250k. Would I be able to borrow on equity and get $170,000 out? If so would it be smart to then rinse and repeat? Taking that $170,000 and leveraging into say 5 more under valued homes and doing the same thing done before? My stragety would be to hold the properties and live off the cashflow from rents. Is this plan feasible at all? It would be a quick way to aquire a lot of properties fast right? The example is just hypothetical so don't say you wont find a property that undervalued please :)